Correlation Between Walgreens Boots and Leafly Holdings
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Leafly Holdings 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 Leafly Holdings 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 Leafly Holdings, you can compare the effects of market volatilities on Walgreens Boots and Leafly Holdings 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 Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Leafly Holdings.
Diversification Opportunities for Walgreens Boots and Leafly Holdings
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Walgreens and Leafly is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings 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 Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Leafly Holdings go up and down completely randomly.
Pair Corralation between Walgreens Boots and Leafly Holdings
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Leafly Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.73 times less risky than Leafly Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The Leafly Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 195.00 in Leafly Holdings on August 23, 2024 and sell it today you would lose (44.00) from holding Leafly Holdings or give up 22.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Leafly Holdings
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Leafly Holdings |
Walgreens Boots and Leafly Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Leafly Holdings
The main advantage of trading using opposite Walgreens Boots and Leafly Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Leafly Holdings 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 Leafly Holdings will offset losses from the drop in Leafly Holdings' long position.| Walgreens Boots vs. PetMed Express | Walgreens Boots vs. China Jo Jo Drugstores | Walgreens Boots vs. Leafly Holdings |
| Leafly Holdings vs. Kiaro Holdings Corp | Leafly Holdings vs. Allstar Health Brands | Leafly Holdings vs. China Jo Jo Drugstores |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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