Correlation Between Walgreens Boots and Grupo Mxico

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Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Grupo Mxico 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 Grupo Mxico 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 Grupo Mxico SAB, you can compare the effects of market volatilities on Walgreens Boots and Grupo Mxico 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 Grupo Mxico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Grupo Mxico.

Diversification Opportunities for Walgreens Boots and Grupo Mxico

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Walgreens and Grupo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo Mxico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Grupo Mxico go up and down completely randomly.

Pair Corralation between Walgreens Boots and Grupo Mxico

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Grupo Mxico. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.14 times less risky than Grupo Mxico. The stock trades about -0.07 of its potential returns per unit of risk. The Grupo Mxico SAB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  264.00  in Grupo Mxico SAB on September 24, 2024 and sell it today you would earn a total of  205.00  from holding Grupo Mxico SAB or generate 77.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.45%
ValuesDaily Returns

Walgreens Boots Alliance  vs.  Grupo Mxico SAB

 Performance 
       Timeline  
Walgreens Boots Alliance 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.
Grupo Mxico SAB 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Mxico SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Mxico reported solid returns over the last few months and may actually be approaching a breakup point.

Walgreens Boots and Grupo Mxico Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walgreens Boots and Grupo Mxico

The main advantage of trading using opposite Walgreens Boots and Grupo Mxico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Grupo Mxico 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 Grupo Mxico will offset losses from the drop in Grupo Mxico's long position.
The idea behind Walgreens Boots Alliance and Grupo Mxico SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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