Correlation Between Walgreens Boots and SPCG Public

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

Diversification Opportunities for Walgreens Boots and SPCG Public

-0.31

Correlation Coefficient

Walgreens Boots  SPCG Public

Very good diversification

The 3 months correlation between Walgreens and SPCG is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and SPCG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPCG Public 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 SPCG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPCG Public has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and SPCG Public go up and down completely randomly.

Pair Corralation between Walgreens Boots and SPCG Public

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the SPCG Public. In addition to that, Walgreens Boots is 2.39 times more volatile than SPCG Public. It trades about -0.03 of its total potential returns per unit of risk. SPCG Public is currently generating about 0.01 per unit of volatility. If you would invest  819.00  in SPCG Public on September 26, 2024 and sell it today you would earn a total of  11.00  from holding SPCG Public or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.8%
Values	Daily Returns

Walgreens Boots Alliance  vs.  SPCG Public

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) 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.

SPCG Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPCG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Walgreens Boots and SPCG Public

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

The idea behind Walgreens Boots Alliance and SPCG Public 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.