Correlation Between Walgreens Boots and VanEck Sustainable

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

Diversification Opportunities for Walgreens Boots and VanEck Sustainable

0.35

Correlation Coefficient

Walgreens Boots  VanEck Sustainable

Weak diversification

The 3 months correlation between Walgreens and VanEck is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and VanEck Sustainable European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Sustainable 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 VanEck Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Sustainable has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and VanEck Sustainable go up and down completely randomly.

Pair Corralation between Walgreens Boots and VanEck Sustainable

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the VanEck Sustainable. In addition to that, Walgreens Boots is 3.97 times more volatile than VanEck Sustainable European. It trades about -0.08 of its total potential returns per unit of risk. VanEck Sustainable European is currently generating about 0.07 per unit of volatility. If you would invest  5,887  in VanEck Sustainable European on September 27, 2024 and sell it today you would earn a total of  1,590  from holding VanEck Sustainable European or generate 27.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.61%
Values	Daily Returns

Walgreens Boots Alliance  vs.  VanEck Sustainable European

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 weak fundamental drivers, Walgreens Boots may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Sustainable European has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, VanEck Sustainable is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walgreens Boots and VanEck Sustainable

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

The idea behind Walgreens Boots Alliance and VanEck Sustainable European 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.