Correlation Between Walgreens Boots and Northland Power
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Northland Power 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 Northland Power 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 Northland Power, you can compare the effects of market volatilities on Walgreens Boots and Northland Power 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 Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Northland Power.
Diversification Opportunities for Walgreens Boots and Northland Power
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walgreens and Northland is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power 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 Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Northland Power go up and down completely randomly.
Pair Corralation between Walgreens Boots and Northland Power
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.16 times more return on investment than Northland Power. However, Walgreens Boots is 2.16 times more volatile than Northland Power. It trades about 0.2 of its potential returns per unit of risk. Northland Power is currently generating about -0.09 per unit of risk. If you would invest 855.00 in Walgreens Boots Alliance on September 15, 2024 and sell it today you would earn a total of 184.00 from holding Walgreens Boots Alliance or generate 21.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Northland Power
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Northland Power |
Walgreens Boots and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Northland Power
The main advantage of trading using opposite Walgreens Boots and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power'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 |
| Northland Power vs. Caltagirone SpA | Northland Power vs. Materialise NV | Northland Power vs. Perma Fix Environmental Services | Northland Power vs. NEWELL RUBBERMAID |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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