Correlation Between Walgreens Boots and Renault SA

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

Diversification Opportunities for Walgreens Boots and Renault SA

-0.2

Correlation Coefficient

Walgreens Boots  Renault SA

Good diversification

The 3 months correlation between Walgreens and Renault is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Renault SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renault SA 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 Renault SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renault SA has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Renault SA go up and down completely randomly.

Pair Corralation between Walgreens Boots and Renault SA

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Renault SA. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.14 times less risky than Renault SA. The stock trades about -0.07 of its potential returns per unit of risk. The Renault SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,280  in Renault SA on September 30, 2024 and sell it today you would earn a total of  1,580  from holding Renault SA or generate 48.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.98%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Renault 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.

Renault SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renault SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Renault SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walgreens Boots and Renault SA

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

The idea behind Walgreens Boots Alliance and Renault 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.