Correlation Between Walgreens Boots and HERBALIFE
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and HERBALIFE 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 HERBALIFE 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 HERBALIFE, you can compare the effects of market volatilities on Walgreens Boots and HERBALIFE 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 HERBALIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and HERBALIFE.
Diversification Opportunities for Walgreens Boots and HERBALIFE
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walgreens and HERBALIFE is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and HERBALIFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HERBALIFE 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 HERBALIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HERBALIFE has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and HERBALIFE go up and down completely randomly.
Pair Corralation between Walgreens Boots and HERBALIFE
Assuming the 90 days horizon Walgreens Boots Alliance is expected to generate 1.39 times more return on investment than HERBALIFE. However, Walgreens Boots is 1.39 times more volatile than HERBALIFE. It trades about 0.04 of its potential returns per unit of risk. HERBALIFE is currently generating about -0.12 per unit of risk. If you would invest 934.00 in Walgreens Boots Alliance on November 3, 2024 and sell it today you would earn a total of 80.00 from holding Walgreens Boots Alliance or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. HERBALIFE
Performance |
| Timeline |
| Walgreens Boots Alliance |
| HERBALIFE |
Walgreens Boots and HERBALIFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and HERBALIFE
The main advantage of trading using opposite Walgreens Boots and HERBALIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, HERBALIFE 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 HERBALIFE will offset losses from the drop in HERBALIFE's long position.| Walgreens Boots vs. GOME Retail Holdings | Walgreens Boots vs. United Breweries Co | Walgreens Boots vs. Ross Stores | Walgreens Boots vs. Thai Beverage Public |
| HERBALIFE vs. Addus HomeCare | HERBALIFE vs. Hisense Home Appliances | HERBALIFE vs. Kingdee International Software | HERBALIFE vs. KENEDIX OFFICE INV |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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