Correlation Between Walgreens Boots and TOPTB

Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and TOPTB 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 TOPTB 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 TOPTB 5375 20 NOV 48, you can compare the effects of market volatilities on Walgreens Boots and TOPTB 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 TOPTB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and TOPTB.

Diversification Opportunities for Walgreens Boots and TOPTB

0.08

Correlation Coefficient

Walgreens Boots  TOPTB

Significant diversification

The 3 months correlation between Walgreens and TOPTB is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and TOPTB 5375 20 NOV 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPTB 5375 20 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 TOPTB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPTB 5375 20 has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and TOPTB go up and down completely randomly.

Pair Corralation between Walgreens Boots and TOPTB

Considering the 90-day investment horizon Walgreens Boots is expected to generate 1.03 times less return on investment than TOPTB. In addition to that, Walgreens Boots is 1.08 times more volatile than TOPTB 5375 20 NOV 48. It trades about 0.06 of its total potential returns per unit of risk. TOPTB 5375 20 NOV 48 is currently generating about 0.06 per unit of volatility. If you would invest  8,875  in TOPTB 5375 20 NOV 48 on September 13, 2024 and sell it today you would earn a total of  426.00  from holding TOPTB 5375 20 NOV 48 or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Walgreens Boots Alliance  vs.  TOPTB 5375 20 NOV 48

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 uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

TOPTB 5375 20

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOPTB 5375 20 NOV 48 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TOPTB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and TOPTB

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

The idea behind Walgreens Boots Alliance and TOPTB 5375 20 NOV 48 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.