Correlation Between Walgreens Boots and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Walgreens Boots and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Volkswagen.
Diversification Opportunities for Walgreens Boots and Volkswagen
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walgreens and Volkswagen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Volkswagen go up and down completely randomly.
Pair Corralation between Walgreens Boots and Volkswagen
Assuming the 90 days horizon Walgreens Boots Alliance is expected to under-perform the Volkswagen. In addition to that, Walgreens Boots is 1.9 times more volatile than Volkswagen AG. It trades about -0.05 of its total potential returns per unit of risk. Volkswagen AG is currently generating about -0.05 per unit of volatility. If you would invest 14,816 in Volkswagen AG on October 25, 2024 and sell it today you would lose (5,216) from holding Volkswagen AG or give up 35.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Volkswagen AG
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Volkswagen AG |
Walgreens Boots and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Volkswagen
The main advantage of trading using opposite Walgreens Boots and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Walgreens Boots vs. VELA TECHNOLPLC LS 0001 | Walgreens Boots vs. UNIVMUSIC GRPADR050 | Walgreens Boots vs. GAZTRTECHNIUADR15EO01 | Walgreens Boots vs. Sunny Optical Technology |
| Volkswagen vs. New Residential Investment | Volkswagen vs. ALBIS LEASING AG | Volkswagen vs. Scottish Mortgage Investment | Volkswagen vs. HK Electric Investments |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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