Correlation Between Walgreens Boots and LEGAL GENERAL
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and LEGAL GENERAL 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 LEGAL GENERAL 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 LEGAL GENERAL, you can compare the effects of market volatilities on Walgreens Boots and LEGAL GENERAL 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 LEGAL GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and LEGAL GENERAL.
Diversification Opportunities for Walgreens Boots and LEGAL GENERAL
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walgreens and LEGAL is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and LEGAL GENERAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL 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 LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and LEGAL GENERAL go up and down completely randomly.
Pair Corralation between Walgreens Boots and LEGAL GENERAL
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 3.37 times more return on investment than LEGAL GENERAL. However, Walgreens Boots is 3.37 times more volatile than LEGAL GENERAL. It trades about 0.05 of its potential returns per unit of risk. LEGAL GENERAL is currently generating about -0.03 per unit of risk. If you would invest 907.00 in Walgreens Boots Alliance on September 23, 2024 and sell it today you would earn a total of 48.00 from holding Walgreens Boots Alliance or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. LEGAL GENERAL
Performance |
| Timeline |
| Walgreens Boots Alliance |
| LEGAL GENERAL |
Walgreens Boots and LEGAL GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and LEGAL GENERAL
The main advantage of trading using opposite Walgreens Boots and LEGAL GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, LEGAL GENERAL 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 LEGAL GENERAL will offset losses from the drop in LEGAL GENERAL's long position.| Walgreens Boots vs. SunLink Health Systems | Walgreens Boots vs. Kiaro Holdings Corp | Walgreens Boots vs. Leafly Holdings | Walgreens Boots vs. PetMed Express |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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