Correlation Between Walgreens Boots and Econocom Group

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

Diversification Opportunities for Walgreens Boots and Econocom Group

-0.45

Correlation Coefficient

Walgreens Boots  Econocom Group

Very good diversification

The 3 months correlation between Walgreens and Econocom is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Econocom Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Econocom Group SANV 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 Econocom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Econocom Group SANV has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Econocom Group go up and down completely randomly.

Pair Corralation between Walgreens Boots and Econocom Group

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Econocom Group. In addition to that, Walgreens Boots is 1.36 times more volatile than Econocom Group SANV. It trades about -0.07 of its total potential returns per unit of risk. Econocom Group SANV is currently generating about -0.03 per unit of volatility. If you would invest  272.00  in Econocom Group SANV on September 20, 2024 and sell it today you would lose (89.00) from holding Econocom Group SANV or give up 32.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.02%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Econocom Group SANV

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.

Econocom Group SANV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Econocom Group SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walgreens Boots and Econocom Group

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

The idea behind Walgreens Boots Alliance and Econocom Group SANV 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.