Correlation Between Walgreens Boots and Lotte Reit
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Lotte Reit 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 Lotte Reit 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 Lotte Reit Co, you can compare the effects of market volatilities on Walgreens Boots and Lotte Reit 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 Lotte Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Lotte Reit.
Diversification Opportunities for Walgreens Boots and Lotte Reit
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Walgreens and Lotte is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Lotte Reit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Reit 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 Lotte Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Reit has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Lotte Reit go up and down completely randomly.
Pair Corralation between Walgreens Boots and Lotte Reit
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Lotte Reit. In addition to that, Walgreens Boots is 2.31 times more volatile than Lotte Reit Co. It trades about -0.07 of its total potential returns per unit of risk. Lotte Reit Co is currently generating about -0.01 per unit of volatility. If you would invest 340,042 in Lotte Reit Co on September 12, 2024 and sell it today you would lose (31,542) from holding Lotte Reit Co or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Lotte Reit Co
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Lotte Reit |
Walgreens Boots and Lotte Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Lotte Reit
The main advantage of trading using opposite Walgreens Boots and Lotte Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Lotte Reit 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 Lotte Reit will offset losses from the drop in Lotte Reit'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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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