Correlation Between GlaxoSmithKline PLC and BRAEMAR HOTELS
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and BRAEMAR HOTELS 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 BRAEMAR HOTELS 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 BRAEMAR HOTELS RES, you can compare the effects of market volatilities on GlaxoSmithKline PLC and BRAEMAR HOTELS 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 BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and BRAEMAR HOTELS.
Diversification Opportunities for GlaxoSmithKline PLC and BRAEMAR HOTELS
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and BRAEMAR is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES 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 BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and BRAEMAR HOTELS go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and BRAEMAR HOTELS
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the BRAEMAR HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 5.34 times less risky than BRAEMAR HOTELS. The stock trades about -0.23 of its potential returns per unit of risk. The BRAEMAR HOTELS RES is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 248.00 in BRAEMAR HOTELS RES on September 1, 2024 and sell it today you would earn a total of 62.00 from holding BRAEMAR HOTELS RES or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. BRAEMAR HOTELS RES
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| BRAEMAR HOTELS RES |
GlaxoSmithKline PLC and BRAEMAR HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and BRAEMAR HOTELS
The main advantage of trading using opposite GlaxoSmithKline PLC and BRAEMAR HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, BRAEMAR HOTELS 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 BRAEMAR HOTELS will offset losses from the drop in BRAEMAR HOTELS'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 |
| BRAEMAR HOTELS vs. Sotherly Hotels | BRAEMAR HOTELS vs. Superior Plus Corp | BRAEMAR HOTELS vs. NMI Holdings | BRAEMAR HOTELS vs. Origin Agritech |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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