Correlation Between GlaxoSmithKline PLC and Humana
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Humana 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 GlaxoSmithKline PLC and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Humana Inc, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Humana 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 GlaxoSmithKline PLC with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Humana.
Diversification Opportunities for GlaxoSmithKline PLC and Humana
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Humana is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and GlaxoSmithKline PLC 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 GlaxoSmithKline PLC ADR are associated (or correlated) with Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Humana go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Humana
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Humana. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.73 times less risky than Humana. The stock trades about -0.12 of its potential returns per unit of risk. The Humana Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 34,490 in Humana Inc on August 26, 2024 and sell it today you would lose (4,477) from holding Humana Inc or give up 12.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Humana Inc
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Humana Inc |
GlaxoSmithKline PLC and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Humana
The main advantage of trading using opposite GlaxoSmithKline PLC and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Humana 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 Humana will offset losses from the drop in Humana's long position.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
| Humana vs. CAP LEASE AVIATION | Humana vs. Cairn Homes PLC | Humana vs. Martin Marietta Materials | Humana vs. Ecclesiastical Insurance Office |
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 Stocks Directory module to find actively traded stocks across global markets.
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