Correlation Between GlaxoSmithKline PLC and Sunspring Metal
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sunspring Metal 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 Sunspring Metal 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 Sunspring Metal Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sunspring Metal 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 Sunspring Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sunspring Metal.
Diversification Opportunities for GlaxoSmithKline PLC and Sunspring Metal
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Sunspring is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp 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 Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sunspring Metal go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sunspring Metal
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 1.36 times more return on investment than Sunspring Metal. However, GlaxoSmithKline PLC is 1.36 times more volatile than Sunspring Metal Corp. It trades about 0.17 of its potential returns per unit of risk. Sunspring Metal Corp is currently generating about 0.0 per unit of risk. If you would invest 3,378 in GlaxoSmithKline PLC ADR on November 22, 2024 and sell it today you would earn a total of 276.00 from holding GlaxoSmithKline PLC ADR or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.43% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sunspring Metal Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sunspring Metal Corp |
GlaxoSmithKline PLC and Sunspring Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sunspring Metal
The main advantage of trading using opposite GlaxoSmithKline PLC and Sunspring Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sunspring Metal 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 Sunspring Metal will offset losses from the drop in Sunspring Metal'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 |
| Sunspring Metal vs. Makalot Industrial Co | Sunspring Metal vs. Eternal Materials Co | Sunspring Metal vs. Feng Tay Enterprises | Sunspring Metal vs. Taiwan Fu Hsing |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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