Correlation Between Walgreens Boots and Trilogy Metals

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

Diversification Opportunities for Walgreens Boots and Trilogy Metals

0.1

Correlation Coefficient

Walgreens Boots  Trilogy Metals

Average diversification

The 3 months correlation between Walgreens and Trilogy is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Trilogy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trilogy Metals 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 Trilogy Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trilogy Metals has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Trilogy Metals go up and down completely randomly.

Pair Corralation between Walgreens Boots and Trilogy Metals

Considering the 90-day investment horizon Walgreens Boots is expected to generate 7.04 times less return on investment than Trilogy Metals. But when comparing it to its historical volatility, Walgreens Boots Alliance is 3.61 times less risky than Trilogy Metals. It trades about 0.07 of its potential returns per unit of risk. Trilogy Metals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  67.00  in Trilogy Metals on September 23, 2024 and sell it today you would earn a total of  91.00  from holding Trilogy Metals or generate 135.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Trilogy Metals

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.

Trilogy Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Trilogy Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and Trilogy Metals

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

The idea behind Walgreens Boots Alliance and Trilogy Metals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.