Correlation Between Visa and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Walgreens Boots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Walgreens Boots Alliance, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Walgreens Boots.
Diversification Opportunities for Visa and Walgreens Boots
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and Walgreens is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Walgreens Boots go up and down completely randomly.
Pair Corralation between Visa and Walgreens Boots
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.37 times more return on investment than Walgreens Boots. However, Visa Class A is 2.72 times less risky than Walgreens Boots. It trades about 0.33 of its potential returns per unit of risk. Walgreens Boots Alliance is currently generating about 0.06 per unit of risk. If you would invest 29,129 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 2,379 from holding Visa Class A or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. Walgreens Boots Alliance
Performance |
| Timeline |
| Visa Class A |
| Walgreens Boots Alliance |
Visa and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Walgreens Boots
The main advantage of trading using opposite Visa and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Walgreens Boots vs. Walgreens Boots Alliance | Walgreens Boots vs. Walgreens Boots Alliance | Walgreens Boots vs. Walgreens Boots Alliance | Walgreens Boots vs. Walgreens Boots Alliance |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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