Correlation Between Walgreens Boots and LiveChat Software

Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and LiveChat Software 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 LiveChat Software 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 LiveChat Software SA, you can compare the effects of market volatilities on Walgreens Boots and LiveChat Software 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 LiveChat Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and LiveChat Software.

Diversification Opportunities for Walgreens Boots and LiveChat Software

-0.33

Correlation Coefficient

Walgreens Boots  LiveChat Software

Very good diversification

The 3 months correlation between Walgreens and LiveChat is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and LiveChat Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveChat Software 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 LiveChat Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveChat Software has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and LiveChat Software go up and down completely randomly.

Pair Corralation between Walgreens Boots and LiveChat Software

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the LiveChat Software. In addition to that, Walgreens Boots is 1.15 times more volatile than LiveChat Software SA. It trades about -0.07 of its total potential returns per unit of risk. LiveChat Software SA is currently generating about 0.0 per unit of volatility. If you would invest  1,571  in LiveChat Software SA on September 26, 2024 and sell it today you would lose (304.00) from holding LiveChat Software SA or give up 19.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  LiveChat Software SA

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

LiveChat Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LiveChat Software SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walgreens Boots and LiveChat Software

The main advantage of trading using opposite Walgreens Boots and LiveChat Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, LiveChat Software 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 LiveChat Software will offset losses from the drop in LiveChat Software's long position.

The idea behind Walgreens Boots Alliance and LiveChat Software SA 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.