Correlation Between Walgreens Boots and Public Company

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

Diversification Opportunities for Walgreens Boots and Public Company

-0.26

Correlation Coefficient

Walgreens Boots  Public Company

Very good diversification

The 3 months correlation between Walgreens and Public is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Public Company Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Management 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 Public Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Management has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Public Company go up and down completely randomly.

Pair Corralation between Walgreens Boots and Public Company

Considering the 90-day investment horizon Walgreens Boots is expected to generate 1.9 times less return on investment than Public Company. But when comparing it to its historical volatility, Walgreens Boots Alliance is 3.64 times less risky than Public Company. It trades about 0.17 of its potential returns per unit of risk. Public Company Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Public Company Management on October 13, 2024 and sell it today you would lose (1.00) from holding Public Company Management or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Public Company Management

Walgreens Boots Alliance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 8 (%) 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.

Public Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Company Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Walgreens Boots and Public Company

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

The idea behind Walgreens Boots Alliance and Public Company Management 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.