Correlation Between Walgreens Boots and ProShares Trust

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

Diversification Opportunities for Walgreens Boots and ProShares Trust

0.11

Correlation Coefficient

Walgreens Boots  ProShares Trust

Average diversification

The 3 months correlation between Walgreens and ProShares is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and ProShares Trust go up and down completely randomly.

Pair Corralation between Walgreens Boots and ProShares Trust

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.7 times more return on investment than ProShares Trust. However, Walgreens Boots is 2.7 times more volatile than ProShares Trust . It trades about 0.08 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.21 per unit of risk. If you would invest  875.00  in Walgreens Boots Alliance on September 14, 2024 and sell it today you would earn a total of  164.00  from holding Walgreens Boots Alliance or generate 18.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Walgreens Boots Alliance  vs.  ProShares Trust

Walgreens Boots Alliance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

ProShares Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, ProShares Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and ProShares Trust

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

The idea behind Walgreens Boots Alliance and ProShares Trust 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.