Correlation Between Walgreens Boots and RedFlow
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and RedFlow 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 RedFlow 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 RedFlow Limited, you can compare the effects of market volatilities on Walgreens Boots and RedFlow 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 RedFlow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and RedFlow.
Diversification Opportunities for Walgreens Boots and RedFlow
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walgreens and RedFlow is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and RedFlow Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedFlow Limited 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 RedFlow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedFlow Limited has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and RedFlow go up and down completely randomly.
Pair Corralation between Walgreens Boots and RedFlow
Considering the 90-day investment horizon Walgreens Boots is expected to generate 49.69 times less return on investment than RedFlow. But when comparing it to its historical volatility, Walgreens Boots Alliance is 28.26 times less risky than RedFlow. It trades about 0.07 of its potential returns per unit of risk. RedFlow Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8.97 in RedFlow Limited on September 23, 2024 and sell it today you would lose (8.96) from holding RedFlow Limited or give up 99.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Walgreens Boots Alliance vs. RedFlow Limited
Performance |
Timeline |
Walgreens Boots Alliance |
RedFlow Limited |
Walgreens Boots and RedFlow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walgreens Boots and RedFlow
The main advantage of trading using opposite Walgreens Boots and RedFlow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, RedFlow 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 RedFlow will offset losses from the drop in RedFlow's long position.Walgreens Boots vs. SunLink Health Systems | Walgreens Boots vs. Kiaro Holdings Corp | Walgreens Boots vs. Leafly Holdings | Walgreens Boots vs. PetMed Express |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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