Correlation Between Walgreens Boots and Nippon Paint
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Nippon Paint 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 Nippon Paint 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 Nippon Paint Holdings, you can compare the effects of market volatilities on Walgreens Boots and Nippon Paint 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 Nippon Paint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Nippon Paint.
Diversification Opportunities for Walgreens Boots and Nippon Paint
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Walgreens and Nippon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Nippon Paint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Paint 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 Nippon Paint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Paint Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Nippon Paint go up and down completely randomly.
Pair Corralation between Walgreens Boots and Nippon Paint
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Nippon Paint. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.42 times less risky than Nippon Paint. The stock trades about -0.07 of its potential returns per unit of risk. The Nippon Paint Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 462.00 in Nippon Paint Holdings on September 14, 2024 and sell it today you would lose (68.00) from holding Nippon Paint Holdings or give up 14.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 74.34% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Nippon Paint Holdings
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Nippon Paint Holdings |
Walgreens Boots and Nippon Paint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Nippon Paint
The main advantage of trading using opposite Walgreens Boots and Nippon Paint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Nippon Paint 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 Nippon Paint will offset losses from the drop in Nippon Paint'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 |
| Nippon Paint vs. Delek Logistics Partners | Nippon Paint vs. Pentair PLC | Nippon Paint vs. TFI International | Nippon Paint vs. Yuexiu Transport Infrastructure |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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