Correlation Between Walgreens Boots and Pimco Preferred

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

Diversification Opportunities for Walgreens Boots and Pimco Preferred

0.41

Correlation Coefficient

Walgreens Boots  Pimco Preferred

Very weak diversification

The 3 months correlation between Walgreens and Pimco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Pimco Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Preferred And 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 Pimco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Preferred And has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Pimco Preferred go up and down completely randomly.

Pair Corralation between Walgreens Boots and Pimco Preferred

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Pimco Preferred. In addition to that, Walgreens Boots is 29.55 times more volatile than Pimco Preferred And. It trades about -0.04 of its total potential returns per unit of risk. Pimco Preferred And is currently generating about 0.34 per unit of volatility. If you would invest  890.00  in Pimco Preferred And on September 15, 2024 and sell it today you would earn a total of  54.00  from holding Pimco Preferred And or generate 6.07% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  Pimco Preferred And

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.

Pimco Preferred And

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Preferred And are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walgreens Boots and Pimco Preferred

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

The idea behind Walgreens Boots Alliance and Pimco Preferred And 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.