Correlation Between Walgreens Boots and Sentinel Balanced

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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

WalgreensSentinelDiversified AwayWalgreensSentinelDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walgreens Boots Alliance  vs.  Sentinel Balanced Fund

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -505101520
JavaScript chart by amCharts 3.21.15WBA SBACX
       Timeline  
Walgreens Boots Alliance 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec8.599.51010.511
Sentinel Balanced 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Balanced Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Sentinel Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec27.82828.228.428.628.829

Walgreens Boots and Sentinel Balanced Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.19-9.88-6.57-3.260.03.296.6810.0813.4816.88 0.51.01.5
JavaScript chart by amCharts 3.21.15WBA SBACX
       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.
The idea behind Walgreens Boots Alliance and Sentinel Balanced Fund 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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