Correlation Between GlaxoSmithKline PLC and Mildef Crete
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Mildef Crete 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 Mildef Crete 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 Mildef Crete, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Mildef Crete 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 Mildef Crete. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Mildef Crete.
Diversification Opportunities for GlaxoSmithKline PLC and Mildef Crete
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Mildef is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Mildef Crete in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mildef Crete 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 Mildef Crete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mildef Crete has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Mildef Crete go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Mildef Crete
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 1.13 times more return on investment than Mildef Crete. However, GlaxoSmithKline PLC is 1.13 times more volatile than Mildef Crete. It trades about -0.3 of its potential returns per unit of risk. Mildef Crete is currently generating about -0.4 per unit of risk. If you would invest 3,774 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would lose (341.00) from holding GlaxoSmithKline PLC ADR or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Mildef Crete
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Mildef Crete |
GlaxoSmithKline PLC and Mildef Crete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Mildef Crete
The main advantage of trading using opposite GlaxoSmithKline PLC and Mildef Crete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Mildef Crete 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 Mildef Crete will offset losses from the drop in Mildef Crete'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 |
| Mildef Crete vs. Medigen Biotechnology | Mildef Crete vs. Wei Chuan Foods | Mildef Crete vs. Otsuka Information Technology | Mildef Crete vs. Golden Biotechnology |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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