Correlation Between Walgreens Boots and Nala Digital

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

Diversification Opportunities for Walgreens Boots and Nala Digital

0.18

Correlation Coefficient

Walgreens Boots  Nala Digital

Average diversification

The 3 months correlation between Walgreens and Nala is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Nala Digital Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nala Digital Commerce 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 Nala Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nala Digital Commerce has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Nala Digital go up and down completely randomly.

Pair Corralation between Walgreens Boots and Nala Digital

Considering the 90-day investment horizon Walgreens Boots is expected to generate 77.75 times less return on investment than Nala Digital. But when comparing it to its historical volatility, Walgreens Boots Alliance is 33.81 times less risky than Nala Digital. It trades about 0.07 of its potential returns per unit of risk. Nala Digital Commerce is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,010  in Nala Digital Commerce on September 24, 2024 and sell it today you would earn a total of  55,990  from holding Nala Digital Commerce or generate 2785.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.77%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Nala Digital Commerce

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.

Nala Digital Commerce

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nala Digital Commerce are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nala Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and Nala Digital

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

The idea behind Walgreens Boots Alliance and Nala Digital Commerce 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.