Correlation Between Walgreens Boots and LION ONE
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on Walgreens Boots and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and LION ONE.
Diversification Opportunities for Walgreens Boots and LION ONE
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walgreens and LION is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and LION ONE go up and down completely randomly.
Pair Corralation between Walgreens Boots and LION ONE
Assuming the 90 days horizon Walgreens Boots Alliance is expected to generate 0.67 times more return on investment than LION ONE. However, Walgreens Boots Alliance is 1.5 times less risky than LION ONE. It trades about -0.09 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.08 per unit of risk. If you would invest 1,996 in Walgreens Boots Alliance on September 4, 2024 and sell it today you would lose (1,132) from holding Walgreens Boots Alliance or give up 56.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. LION ONE METALS
Performance |
| Timeline |
| Walgreens Boots Alliance |
| LION ONE METALS |
Walgreens Boots and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and LION ONE
The main advantage of trading using opposite Walgreens Boots and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Walgreens Boots vs. Alibaba Health Information | Walgreens Boots vs. Beijing Tong Ren | Walgreens Boots vs. Oriola Oyj | Walgreens Boots vs. Rite Aid |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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