Correlation Between Walgreens Boots and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Sally Beauty 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 Sally Beauty 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 Sally Beauty Holdings, you can compare the effects of market volatilities on Walgreens Boots and Sally Beauty 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 Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Sally Beauty.
Diversification Opportunities for Walgreens Boots and Sally Beauty
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walgreens and Sally is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings 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 Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Sally Beauty go up and down completely randomly.
Pair Corralation between Walgreens Boots and Sally Beauty
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 0.96 times more return on investment than Sally Beauty. However, Walgreens Boots Alliance is 1.04 times less risky than Sally Beauty. It trades about -0.24 of its potential returns per unit of risk. Sally Beauty Holdings is currently generating about -0.24 per unit of risk. If you would invest 2,069 in Walgreens Boots Alliance on January 17, 2024 and sell it today you would lose (304.00) from holding Walgreens Boots Alliance or give up 14.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Sally Beauty Holdings
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Sally Beauty Holdings |
Walgreens Boots and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Sally Beauty
The main advantage of trading using opposite Walgreens Boots and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Sally Beauty 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.| Walgreens Boots vs. PetMed Express | Walgreens Boots vs. Bimi International Medical | Walgreens Boots vs. Fire Flower Holdings | Walgreens Boots vs. GABY Inc |
| Sally Beauty vs. RH | Sally Beauty vs. Best Buy Co | Sally Beauty vs. AutoZone | Sally Beauty vs. Williams Sonoma |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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