Correlation Between Walgreens Boots and Sentinel Balanced
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Sentinel Balanced 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 Sentinel Balanced 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 Sentinel Balanced Fund, you can compare the effects of market volatilities on Walgreens Boots and Sentinel Balanced 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 Sentinel Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Sentinel Balanced.
Diversification Opportunities for Walgreens Boots and Sentinel Balanced
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walgreens and Sentinel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Sentinel Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Balanced 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 Sentinel Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Balanced has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Sentinel Balanced go up and down completely randomly.
Pair Corralation between Walgreens Boots and Sentinel Balanced
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 8.88 times more return on investment than Sentinel Balanced. However, Walgreens Boots is 8.88 times more volatile than Sentinel Balanced Fund. It trades about 0.07 of its potential returns per unit of risk. Sentinel Balanced Fund is currently generating about 0.02 per unit of risk. 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 Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Walgreens Boots Alliance vs. Sentinel Balanced Fund
Performance |
Timeline |
Walgreens Boots Alliance |
Sentinel Balanced |
Walgreens Boots and Sentinel Balanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walgreens Boots and Sentinel Balanced
The main advantage of trading using opposite Walgreens Boots and Sentinel Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Sentinel Balanced 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 Sentinel Balanced will offset losses from the drop in Sentinel Balanced's long position.Walgreens Boots vs. SunLink Health Systems | ||
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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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