Correlation Between Walgreens Boots and Excellon Resources

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

Diversification Opportunities for Walgreens Boots and Excellon Resources

-0.03

Correlation Coefficient

Walgreens Boots  Excellon Resources

Good diversification

The 3 months correlation between Walgreens and Excellon is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Excellon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellon Resources 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 Excellon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellon Resources has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Excellon Resources go up and down completely randomly.

Pair Corralation between Walgreens Boots and Excellon Resources

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Excellon Resources. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 2.38 times less risky than Excellon Resources. The stock trades about -0.06 of its potential returns per unit of risk. The Excellon Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Excellon Resources on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Excellon Resources or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Excellon Resources

Walgreens Boots Alliance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 7 (%) 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.

Excellon Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excellon Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and Excellon Resources

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

The idea behind Walgreens Boots Alliance and Excellon Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.