Correlation Between Walgreens Boots and Transportation

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

Diversification Opportunities for Walgreens Boots and Transportation

-0.42

Correlation Coefficient

Walgreens Boots  Transportation

Very good diversification

The 3 months correlation between Walgreens and Transportation is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Transportation and Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation 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 Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Transportation go up and down completely randomly.

Pair Corralation between Walgreens Boots and Transportation

Considering the 90-day investment horizon Walgreens Boots is expected to generate 104.62 times less return on investment than Transportation. But when comparing it to its historical volatility, Walgreens Boots Alliance is 100.08 times less risky than Transportation. It trades about 0.19 of its potential returns per unit of risk. Transportation and Logistics is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Transportation and Logistics on May 4, 2025 and sell it today you would lose (0.01) from holding Transportation and Logistics or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Transportation and Logistics

Walgreens Boots Alliance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Walgreens Boots is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Transportation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation and Logistics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Transportation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and Transportation

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

The idea behind Walgreens Boots Alliance and Transportation and Logistics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.