Correlation Between GLG LIFE and Rolls-Royce Holdings
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and Rolls-Royce Holdings 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 GLG LIFE and Rolls-Royce Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and Rolls Royce Holdings plc, you can compare the effects of market volatilities on GLG LIFE and Rolls-Royce Holdings 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 GLG LIFE with a short position of Rolls-Royce Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and Rolls-Royce Holdings.
Diversification Opportunities for GLG LIFE and Rolls-Royce Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLG and Rolls-Royce is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Rolls Royce Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with Rolls-Royce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of GLG LIFE i.e., GLG LIFE and Rolls-Royce Holdings go up and down completely randomly.
Pair Corralation between GLG LIFE and Rolls-Royce Holdings
If you would invest 662.00 in Rolls Royce Holdings plc on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Rolls Royce Holdings plc or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GLG LIFE TECH vs. Rolls Royce Holdings plc
Performance |
| Timeline |
| GLG LIFE TECH |
| Rolls Royce Holdings |
GLG LIFE and Rolls-Royce Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and Rolls-Royce Holdings
The main advantage of trading using opposite GLG LIFE and Rolls-Royce Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, Rolls-Royce Holdings 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 Rolls-Royce Holdings will offset losses from the drop in Rolls-Royce Holdings' long position.| GLG LIFE vs. North American Construction | GLG LIFE vs. Hanison Construction Holdings | GLG LIFE vs. Sumitomo Mitsui Construction | GLG LIFE vs. Nufarm Limited |
| Rolls-Royce Holdings vs. Amkor Technology | Rolls-Royce Holdings vs. GLG LIFE TECH | Rolls-Royce Holdings vs. CECO ENVIRONMENTAL | Rolls-Royce Holdings vs. Digilife Technologies Limited |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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