Correlation Between Walgreens Boots and JB Hi-Fi

Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and JB Hi-Fi at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Walgreens Boots and JB Hi-Fi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walgreens Boots Alliance and JB Hi Fi, you can compare the effects of market volatilities on Walgreens Boots and JB Hi-Fi and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Walgreens Boots with a short position of JB Hi-Fi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and JB Hi-Fi.

Diversification Opportunities for Walgreens Boots and JB Hi-Fi

-0.3

Correlation Coefficient

Walgreens Boots  JB Hi-Fi

Very good diversification

The 3 months correlation between Walgreens and JBH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and JB Hi Fi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hi Fi and Walgreens Boots is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Walgreens Boots Alliance are associated (or correlated) with JB Hi-Fi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hi Fi has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and JB Hi-Fi go up and down completely randomly.

Pair Corralation between Walgreens Boots and JB Hi-Fi

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 3.0 times more return on investment than JB Hi-Fi. However, Walgreens Boots is 3.0 times more volatile than JB Hi Fi. It trades about 0.08 of its potential returns per unit of risk. JB Hi Fi is currently generating about 0.01 per unit of risk. If you would invest  926.00  in Walgreens Boots Alliance on December 28, 2024 and sell it today you would earn a total of  190.00  from holding Walgreens Boots Alliance or generate 20.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Walgreens Boots Alliance  vs.  JB Hi Fi

Walgreens Boots Alliance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

JB Hi Fi

Risk-Adjusted Performance

Very Weak

Over the last 90 days JB Hi Fi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, JB Hi-Fi is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walgreens Boots and JB Hi-Fi

The main advantage of trading using opposite Walgreens Boots and JB Hi-Fi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, JB Hi-Fi can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in JB Hi-Fi will offset losses from the drop in JB Hi-Fi's long position.

The idea behind Walgreens Boots Alliance and JB Hi Fi pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.