Correlation Between Walgreens Boots and RenaissanceRe Holdings
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and RenaissanceRe 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 RenaissanceRe 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 RenaissanceRe Holdings, you can compare the effects of market volatilities on Walgreens Boots and RenaissanceRe 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 RenaissanceRe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and RenaissanceRe Holdings.
Diversification Opportunities for Walgreens Boots and RenaissanceRe Holdings
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walgreens and RenaissanceRe is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe 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 RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and RenaissanceRe Holdings go up and down completely randomly.
Pair Corralation between Walgreens Boots and RenaissanceRe Holdings
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 3.0 times more return on investment than RenaissanceRe Holdings. However, Walgreens Boots is 3.0 times more volatile than RenaissanceRe Holdings. It trades about 0.07 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about -0.3 per unit of risk. If you would invest 906.00 in Walgreens Boots Alliance on September 24, 2024 and sell it today you would earn a total of 49.00 from holding Walgreens Boots Alliance or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. RenaissanceRe Holdings
Performance |
| Timeline |
| Walgreens Boots Alliance |
| RenaissanceRe Holdings |
Walgreens Boots and RenaissanceRe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and RenaissanceRe Holdings
The main advantage of trading using opposite Walgreens Boots and RenaissanceRe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, RenaissanceRe 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 RenaissanceRe Holdings will offset losses from the drop in RenaissanceRe Holdings' long position.| Walgreens Boots vs. Leafly Holdings | Walgreens Boots vs. WM Technology | Walgreens Boots vs. Revelation Biosciences | Walgreens Boots vs. AEye Inc |
| RenaissanceRe Holdings vs. Methode Electronics | RenaissanceRe Holdings vs. TT Electronics PLC | RenaissanceRe Holdings vs. Strategic Education | RenaissanceRe Holdings vs. DeVry Education Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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