Correlation Between GlaxoSmithKline PLC and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Leverage Shares 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 Leverage Shares 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 Leverage Shares 3x, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Leverage Shares.
Diversification Opportunities for GlaxoSmithKline PLC and Leverage Shares
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Leverage is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Leverage Shares go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Leverage Shares
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 40.82 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 7.56 times less risky than Leverage Shares. It trades about 0.01 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,407,950 in Leverage Shares 3x on August 25, 2024 and sell it today you would lose (846,350) from holding Leverage Shares 3x or give up 60.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Leverage Shares 3x
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Leverage Shares 3x |
GlaxoSmithKline PLC and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Leverage Shares
The main advantage of trading using opposite GlaxoSmithKline PLC and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' 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 |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Leverage Shares 3x |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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