Correlation Between Walgreens Boots and United Overseas

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

Diversification Opportunities for Walgreens Boots and United Overseas

0.06

Correlation Coefficient

Walgreens Boots  United Overseas

Significant diversification

The 3 months correlation between Walgreens and United is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank 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 United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and United Overseas go up and down completely randomly.

Pair Corralation between Walgreens Boots and United Overseas

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the United Overseas. In addition to that, Walgreens Boots is 3.31 times more volatile than United Overseas Bank. It trades about -0.17 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.09 per unit of volatility. If you would invest  2,648  in United Overseas Bank on October 11, 2024 and sell it today you would earn a total of  41.00  from holding United Overseas Bank or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  United Overseas Bank

Walgreens Boots Alliance

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Overseas Bank

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, United Overseas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and United Overseas

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

The idea behind Walgreens Boots Alliance and United Overseas Bank 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.