Correlation Between Walgreens Boots and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Walgreens Boots and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and INDOFOOD AGRI.
Diversification Opportunities for Walgreens Boots and INDOFOOD AGRI
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walgreens and INDOFOOD is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Walgreens Boots and INDOFOOD AGRI
Assuming the 90 days horizon Walgreens Boots Alliance is expected to under-perform the INDOFOOD AGRI. In addition to that, Walgreens Boots is 1.26 times more volatile than INDOFOOD AGRI RES. It trades about -0.09 of its total potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.03 per unit of volatility. If you would invest 18.00 in INDOFOOD AGRI RES on September 4, 2024 and sell it today you would earn a total of 4.00 from holding INDOFOOD AGRI RES or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Walgreens Boots Alliance |
| INDOFOOD AGRI RES |
Walgreens Boots and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and INDOFOOD AGRI
The main advantage of trading using opposite Walgreens Boots and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| Walgreens Boots vs. Alibaba Health Information | Walgreens Boots vs. Beijing Tong Ren | Walgreens Boots vs. PetMed Express | Walgreens Boots vs. Oriola Oyj |
| INDOFOOD AGRI vs. NEWELL RUBBERMAID | INDOFOOD AGRI vs. PENN NATL GAMING | INDOFOOD AGRI vs. Mitsubishi Materials | INDOFOOD AGRI vs. Penn National Gaming |
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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