Correlation Between Walgreens Boots and Golden Ridge

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

Diversification Opportunities for Walgreens Boots and Golden Ridge

0.0

Correlation Coefficient

Walgreens Boots  Golden Ridge

Pay attention - limited upside

The 3 months correlation between Walgreens and Golden is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Golden Ridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ridge 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 Golden Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ridge Resources has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Golden Ridge go up and down completely randomly.

Pair Corralation between Walgreens Boots and Golden Ridge

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Golden Ridge. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 2.13 times less risky than Golden Ridge. The stock trades about -0.08 of its potential returns per unit of risk. The Golden Ridge Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Golden Ridge Resources on September 26, 2024 and sell it today you would lose (2.00) from holding Golden Ridge Resources or give up 20.0% of portfolio value over 90 days.

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

Walgreens Boots Alliance  vs.  Golden Ridge Resources

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) 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.

Golden Ridge Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ridge Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Golden Ridge is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walgreens Boots and Golden Ridge

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

The idea behind Walgreens Boots Alliance and Golden Ridge 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 Global Correlations module to find global opportunities by holding instruments from different markets.