Correlation Between Walgreens Boots and Wanger International

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

Diversification Opportunities for Walgreens Boots and Wanger International

-0.28

Correlation Coefficient

Walgreens Boots  Wanger International

Very good diversification

The 3 months correlation between Walgreens and Wanger is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Wanger International Wanger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wanger 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 Wanger International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wanger International has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Wanger International go up and down completely randomly.

Pair Corralation between Walgreens Boots and Wanger International

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Wanger International. In addition to that, Walgreens Boots is 2.93 times more volatile than Wanger International Wanger. It trades about -0.07 of its total potential returns per unit of risk. Wanger International Wanger is currently generating about 0.02 per unit of volatility. If you would invest  1,727  in Wanger International Wanger on September 20, 2024 and sell it today you would earn a total of  116.00  from holding Wanger International Wanger or generate 6.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Wanger International Wanger

Walgreens Boots Alliance

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 6 (%) 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.

Wanger International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wanger International Wanger has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Walgreens Boots and Wanger International

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

The idea behind Walgreens Boots Alliance and Wanger International Wanger 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.