Correlation Between Walgreens Boots and TRANS NATIONWIDE

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

Diversification Opportunities for Walgreens Boots and TRANS NATIONWIDE

0.54

Correlation Coefficient

Walgreens Boots  TRANS NATIONWIDE

Very weak diversification

The 3 months correlation between Walgreens and TRANS is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and TRANS NATIONWIDE EXPRESS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANS NATIONWIDE EXP 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 TRANS NATIONWIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANS NATIONWIDE EXP has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and TRANS NATIONWIDE go up and down completely randomly.

Pair Corralation between Walgreens Boots and TRANS NATIONWIDE

Considering the 90-day investment horizon Walgreens Boots is expected to generate 1.74 times less return on investment than TRANS NATIONWIDE. In addition to that, Walgreens Boots is 1.7 times more volatile than TRANS NATIONWIDE EXPRESS PLC. It trades about 0.17 of its total potential returns per unit of risk. TRANS NATIONWIDE EXPRESS PLC is currently generating about 0.5 per unit of volatility. If you would invest  138.00  in TRANS NATIONWIDE EXPRESS PLC on October 17, 2024 and sell it today you would earn a total of  62.00  from holding TRANS NATIONWIDE EXPRESS PLC or generate 44.93% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  TRANS NATIONWIDE EXPRESS PLC

Walgreens Boots Alliance

Risk-Adjusted Performance

6 of 100

Insignificant

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.

TRANS NATIONWIDE EXP

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRANS NATIONWIDE EXPRESS PLC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, TRANS NATIONWIDE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and TRANS NATIONWIDE

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

The idea behind Walgreens Boots Alliance and TRANS NATIONWIDE EXPRESS PLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.