Correlation Between Walgreens Boots and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on Walgreens Boots and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and IMPERIAL TOBACCO.
Diversification Opportunities for Walgreens Boots and IMPERIAL TOBACCO
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walgreens and IMPERIAL is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Walgreens Boots and IMPERIAL TOBACCO
Assuming the 90 days horizon Walgreens Boots Alliance is expected to generate 3.12 times more return on investment than IMPERIAL TOBACCO. However, Walgreens Boots is 3.12 times more volatile than IMPERIAL TOBACCO . It trades about 0.11 of its potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.23 per unit of risk. If you would invest 777.00 in Walgreens Boots Alliance on September 12, 2024 and sell it today you would earn a total of 192.00 from holding Walgreens Boots Alliance or generate 24.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Walgreens Boots Alliance |
| IMPERIAL TOBACCO |
Walgreens Boots and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and IMPERIAL TOBACCO
The main advantage of trading using opposite Walgreens Boots and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Walgreens Boots vs. DEVRY EDUCATION GRP | Walgreens Boots vs. CHINA EDUCATION GROUP | Walgreens Boots vs. Gaztransport Technigaz SA | Walgreens Boots vs. DeVry Education Group |
| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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