Correlation Between Walgreens Boots and BGF World
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and BGF World 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 BGF World 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 BGF World Gold, you can compare the effects of market volatilities on Walgreens Boots and BGF World 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 BGF World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and BGF World.
Diversification Opportunities for Walgreens Boots and BGF World
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walgreens and BGF is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and BGF World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF World Gold 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 BGF World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF World Gold has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and BGF World go up and down completely randomly.
Pair Corralation between Walgreens Boots and BGF World
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the BGF World. In addition to that, Walgreens Boots is 1.66 times more volatile than BGF World Gold. It trades about -0.07 of its total potential returns per unit of risk. BGF World Gold is currently generating about 0.11 per unit of volatility. If you would invest 2,721 in BGF World Gold on October 7, 2024 and sell it today you would earn a total of 1,179 from holding BGF World Gold or generate 43.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 44.35% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. BGF World Gold
Performance |
| Timeline |
| Walgreens Boots Alliance |
| BGF World Gold |
Walgreens Boots and BGF World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and BGF World
The main advantage of trading using opposite Walgreens Boots and BGF World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, BGF World 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 BGF World will offset losses from the drop in BGF World'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 |
| BGF World vs. BGF Euro Markets | BGF World vs. BGF Global Allocation | BGF World vs. BGF Global Allocation | BGF World vs. BGF Euro Markets |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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