Correlation Between Walgreens Boots and SSgA SPDR

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

Diversification Opportunities for Walgreens Boots and SSgA SPDR

0.08

Correlation Coefficient

Walgreens Boots  SSgA SPDR

Significant diversification

The 3 months correlation between Walgreens and SSgA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and SSgA SPDR go up and down completely randomly.

Pair Corralation between Walgreens Boots and SSgA SPDR

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the SSgA SPDR. In addition to that, Walgreens Boots is 2.3 times more volatile than SSgA SPDR ETFs. It trades about -0.07 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.04 per unit of volatility. If you would invest  5,362  in SSgA SPDR ETFs on September 30, 2024 and sell it today you would earn a total of  1,061  from holding SSgA SPDR ETFs or generate 19.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.93%
Values	Daily Returns

Walgreens Boots Alliance  vs.  SSgA SPDR ETFs

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

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.

SSgA SPDR ETFs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSgA SPDR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walgreens Boots and SSgA SPDR

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

The idea behind Walgreens Boots Alliance and SSgA SPDR ETFs 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.