Correlation Between Walgreens Boots and SEP Acquisition
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and SEP Acquisition 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 SEP Acquisition 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 SEP Acquisition Corp, you can compare the effects of market volatilities on Walgreens Boots and SEP Acquisition 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 SEP Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and SEP Acquisition.
Diversification Opportunities for Walgreens Boots and SEP Acquisition
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walgreens and SEP is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and SEP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEP Acquisition Corp 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 SEP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEP Acquisition Corp has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and SEP Acquisition go up and down completely randomly.
Pair Corralation between Walgreens Boots and SEP Acquisition
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the SEP Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.76 times less risky than SEP Acquisition. The stock trades about -0.05 of its potential returns per unit of risk. The SEP Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,060 in SEP Acquisition Corp on September 14, 2024 and sell it today you would lose (28.00) from holding SEP Acquisition Corp or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 62.08% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. SEP Acquisition Corp
Performance |
| Timeline |
| Walgreens Boots Alliance |
| SEP Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walgreens Boots and SEP Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and SEP Acquisition
The main advantage of trading using opposite Walgreens Boots and SEP Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, SEP Acquisition 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 SEP Acquisition will offset losses from the drop in SEP Acquisition'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 |
| SEP Acquisition vs. SunOpta | SEP Acquisition vs. AMCON Distributing | SEP Acquisition vs. CDW Corp | SEP Acquisition vs. Paltalk |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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