Correlation Between Walgreens Boots and Borusan Mannesmann

Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Borusan Mannesmann 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 Borusan Mannesmann 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 Borusan Mannesmann Boru, you can compare the effects of market volatilities on Walgreens Boots and Borusan Mannesmann 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 Borusan Mannesmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Borusan Mannesmann.

Diversification Opportunities for Walgreens Boots and Borusan Mannesmann

-0.14

Correlation Coefficient

Walgreens Boots  Borusan Mannesmann

Good diversification

The 3 months correlation between Walgreens and Borusan is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Borusan Mannesmann Boru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borusan Mannesmann Boru 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 Borusan Mannesmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borusan Mannesmann Boru has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Borusan Mannesmann go up and down completely randomly.

Pair Corralation between Walgreens Boots and Borusan Mannesmann

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Borusan Mannesmann. In addition to that, Walgreens Boots is 1.08 times more volatile than Borusan Mannesmann Boru. It trades about -0.09 of its total potential returns per unit of risk. Borusan Mannesmann Boru is currently generating about -0.03 per unit of volatility. If you would invest  59,100  in Borusan Mannesmann Boru on September 24, 2024 and sell it today you would lose (15,575) from holding Borusan Mannesmann Boru or give up 26.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Borusan Mannesmann Boru

Walgreens Boots Alliance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Borusan Mannesmann Boru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borusan Mannesmann Boru has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Walgreens Boots and Borusan Mannesmann

The main advantage of trading using opposite Walgreens Boots and Borusan Mannesmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Borusan Mannesmann 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 Borusan Mannesmann will offset losses from the drop in Borusan Mannesmann's long position.

The idea behind Walgreens Boots Alliance and Borusan Mannesmann Boru pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.