Correlation Between Walgreens Boots and Keurig Dr

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

Diversification Opportunities for Walgreens Boots and Keurig Dr

0.16

Correlation Coefficient

Walgreens Boots  Keurig Dr

Average diversification

The 3 months correlation between Walgreens and Keurig is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Keurig Dr go up and down completely randomly.

Pair Corralation between Walgreens Boots and Keurig Dr

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.94 times more return on investment than Keurig Dr. However, Walgreens Boots is 2.94 times more volatile than Keurig Dr Pepper. It trades about 0.04 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.08 per unit of risk. If you would invest  879.00  in Walgreens Boots Alliance on September 27, 2024 and sell it today you would earn a total of  40.00  from holding Walgreens Boots Alliance or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Keurig Dr Pepper

Walgreens Boots Alliance

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Walgreens Boots and Keurig Dr

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

The idea behind Walgreens Boots Alliance and Keurig Dr Pepper 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.