Correlation Between Walgreens Boots and Reeds

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

Diversification Opportunities for Walgreens Boots and Reeds

-0.3

Correlation Coefficient

Walgreens Boots  Reeds

Very good diversification

The 3 months correlation between Walgreens and Reeds is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Reeds Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reeds Inc 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 Reeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reeds Inc has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Reeds go up and down completely randomly.

Pair Corralation between Walgreens Boots and Reeds

If you would invest  831.00  in Walgreens Boots Alliance on September 23, 2024 and sell it today you would earn a total of  124.00  from holding Walgreens Boots Alliance or generate 14.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Reeds Inc

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.

Reeds Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reeds Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Reeds is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walgreens Boots and Reeds

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

The idea behind Walgreens Boots Alliance and Reeds Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .