Correlation Between Walgreens Boots and SMUCKER

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

Diversification Opportunities for Walgreens Boots and SMUCKER

-0.69

Correlation Coefficient

Walgreens Boots  SMUCKER

Excellent diversification

The 3 months correlation between Walgreens and SMUCKER is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and SMUCKER J M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMUCKER J M 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 SMUCKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMUCKER J M has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and SMUCKER go up and down completely randomly.

Pair Corralation between Walgreens Boots and SMUCKER

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.54 times more return on investment than SMUCKER. However, Walgreens Boots is 2.54 times more volatile than SMUCKER J M. It trades about 0.09 of its potential returns per unit of risk. SMUCKER J M is currently generating about 0.06 per unit of risk. If you would invest  1,014  in Walgreens Boots Alliance on October 20, 2024 and sell it today you would earn a total of  238.00  from holding Walgreens Boots Alliance or generate 23.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	47.54%
Values	Daily Returns

Walgreens Boots Alliance  vs.  SMUCKER J M

Walgreens Boots Alliance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 7 (%) 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.

SMUCKER J M

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SMUCKER J M are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, SMUCKER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walgreens Boots and SMUCKER

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

The idea behind Walgreens Boots Alliance and SMUCKER J M 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..