Correlation Between Walgreens Boots and Wellstar International

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

Diversification Opportunities for Walgreens Boots and Wellstar International

0.0

Correlation Coefficient

Walgreens Boots  Wellstar International

Pay attention - limited upside

The 3 months correlation between Walgreens and Wellstar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Wellstar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wellstar International 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 Wellstar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wellstar International has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Wellstar International go up and down completely randomly.

Pair Corralation between Walgreens Boots and Wellstar International

If you would invest  0.00  in Wellstar International on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Wellstar International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Wellstar International

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

Wellstar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wellstar International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wellstar International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Walgreens Boots and Wellstar International

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

The idea behind Walgreens Boots Alliance and Wellstar International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.