Correlation Between Walgreens Boots and Webster Financial
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Webster Financial 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 Webster Financial 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 Webster Financial, you can compare the effects of market volatilities on Walgreens Boots and Webster Financial 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 Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Webster Financial.
Diversification Opportunities for Walgreens Boots and Webster Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walgreens and Webster is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial 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 Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Webster Financial go up and down completely randomly.
Pair Corralation between Walgreens Boots and Webster Financial
Assuming the 90 days trading horizon Walgreens Boots is expected to generate 47.74 times less return on investment than Webster Financial. But when comparing it to its historical volatility, Walgreens Boots Alliance is 1.43 times less risky than Webster Financial. It trades about 0.01 of its potential returns per unit of risk. Webster Financial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,640 in Webster Financial on September 5, 2024 and sell it today you would earn a total of 1,160 from holding Webster Financial or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Webster Financial
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Webster Financial |
Walgreens Boots and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Webster Financial
The main advantage of trading using opposite Walgreens Boots and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Webster Financial 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 Webster Financial will offset losses from the drop in Webster Financial's long position.| Walgreens Boots vs. Webster Financial | Walgreens Boots vs. BE Semiconductor Industries | Walgreens Boots vs. MagnaChip Semiconductor Corp | Walgreens Boots vs. VIRG NATL BANKSH |
| Webster Financial vs. The PNC Financial | Webster Financial vs. Fifth Third Bancorp | Webster Financial vs. Regions Financial |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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