Correlation Between American Green and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both American Green and Walgreens Boots 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 American Green and Walgreens Boots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Green and Walgreens Boots Alliance, you can compare the effects of market volatilities on American Green and Walgreens Boots 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 American Green with a short position of Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Green and Walgreens Boots.
Diversification Opportunities for American Green and Walgreens Boots
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Walgreens is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Green and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance and American Green 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 American Green are associated (or correlated) with Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of American Green i.e., American Green and Walgreens Boots go up and down completely randomly.
Pair Corralation between American Green and Walgreens Boots
Given the investment horizon of 90 days American Green is expected to generate 9.92 times more return on investment than Walgreens Boots. However, American Green is 9.92 times more volatile than Walgreens Boots Alliance. It trades about 0.04 of its potential returns per unit of risk. Walgreens Boots Alliance is currently generating about -0.06 per unit of risk. If you would invest 0.28 in American Green on January 26, 2024 and sell it today you would lose (0.23) from holding American Green or give up 83.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Green vs. Walgreens Boots Alliance
Performance |
| Timeline |
| American Green |
| Walgreens Boots Alliance |
American Green and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Green and Walgreens Boots
The main advantage of trading using opposite American Green and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Green position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' long position.| American Green vs. Greengro Tech | American Green vs. Growlife | American Green vs. Hemp Inc | American Green vs. Easton Pharmaceutica |
| Walgreens Boots vs. PetMed Express | Walgreens Boots vs. Bimi International Medical | Walgreens Boots vs. Leafly Holdings | Walgreens Boots vs. Fire Flower Holdings |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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