Correlation Between Walgreens Boots and St James’s
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and St James’s 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 St James’s 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 St Jamess Place, you can compare the effects of market volatilities on Walgreens Boots and St James’s 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 St James’s. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and St James’s.
Diversification Opportunities for Walgreens Boots and St James’s
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walgreens and 1IV is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and St Jamess Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Jamess Place 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 St James’s. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Jamess Place has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and St James’s go up and down completely randomly.
Pair Corralation between Walgreens Boots and St James’s
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 3.33 times more return on investment than St James’s. However, Walgreens Boots is 3.33 times more volatile than St Jamess Place. It trades about 0.12 of its potential returns per unit of risk. St Jamess Place is currently generating about 0.3 per unit of risk. If you would invest 876.00 in Walgreens Boots Alliance on September 14, 2024 and sell it today you would earn a total of 97.00 from holding Walgreens Boots Alliance or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. St Jamess Place
Performance |
| Timeline |
| Walgreens Boots Alliance |
| St Jamess Place |
Walgreens Boots and St James’s Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and St James’s
The main advantage of trading using opposite Walgreens Boots and St James’s positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, St James’s 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 St James’s will offset losses from the drop in St James’s' long position.| Walgreens Boots vs. PetMed Express | Walgreens Boots vs. 111 Inc | Walgreens Boots vs. China Jo Jo Drugstores | Walgreens Boots vs. High Tide |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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