Correlation Between Walgreens Boots and Orca Energy

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

Diversification Opportunities for Walgreens Boots and Orca Energy

0.0

Correlation Coefficient

Walgreens Boots  Orca Energy

Pay attention - limited upside

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

Pair Corralation between Walgreens Boots and Orca Energy

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Orca Energy. In addition to that, Walgreens Boots is 6.95 times more volatile than Orca Energy Group. It trades about -0.07 of its total potential returns per unit of risk. Orca Energy Group is currently generating about -0.04 per unit of volatility. If you would invest  6,639  in Orca Energy Group on September 23, 2024 and sell it today you would lose (539.00) from holding Orca Energy Group or give up 8.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Orca Energy Group

Walgreens Boots Alliance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 5 (%) 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.

Orca Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orca Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Orca Energy 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 Orca Energy

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

The idea behind Walgreens Boots Alliance and Orca Energy Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.