Correlation Between Safety Insurance and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Walgreens Boots 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 Safety Insurance and Walgreens Boots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and Walgreens Boots Alliance, you can compare the effects of market volatilities on Safety Insurance and Walgreens Boots 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 Safety Insurance with a short position of Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Walgreens Boots.
Diversification Opportunities for Safety Insurance and Walgreens Boots
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Safety and Walgreens is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance and Safety Insurance 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 Safety Insurance Group are associated (or correlated) with Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of Safety Insurance i.e., Safety Insurance and Walgreens Boots go up and down completely randomly.
Pair Corralation between Safety Insurance and Walgreens Boots
Assuming the 90 days horizon Safety Insurance Group is expected to under-perform the Walgreens Boots. But the stock apears to be less risky and, when comparing its historical volatility, Safety Insurance Group is 4.17 times less risky than Walgreens Boots. The stock trades about -0.13 of its potential returns per unit of risk. The Walgreens Boots Alliance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 848.00 in Walgreens Boots Alliance on October 9, 2024 and sell it today you would earn a total of 70.00 from holding Walgreens Boots Alliance or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Safety Insurance Group vs. Walgreens Boots Alliance
Performance |
| Timeline |
| Safety Insurance |
| Walgreens Boots Alliance |
Safety Insurance and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Walgreens Boots
The main advantage of trading using opposite Safety Insurance and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' long position.| Safety Insurance vs. PICC Property and | Safety Insurance vs. QBE Insurance Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. NMI Holdings |
| Walgreens Boots vs. KINGBOARD CHEMICAL | Walgreens Boots vs. Mitsui Chemicals | Walgreens Boots vs. BJs Restaurants | Walgreens Boots vs. VARIOUS EATERIES LS |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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