Correlation Between GlaxoSmithKline PLC and American Creek
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and American Creek 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 American Creek 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 American Creek Resources, you can compare the effects of market volatilities on GlaxoSmithKline PLC and American Creek 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 American Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and American Creek.
Diversification Opportunities for GlaxoSmithKline PLC and American Creek
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and American is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and American Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Creek Resources 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 American Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Creek Resources has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and American Creek go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and American Creek
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 23.15 times less return on investment than American Creek. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 5.13 times less risky than American Creek. It trades about 0.01 of its potential returns per unit of risk. American Creek Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10.00 in American Creek Resources on August 26, 2024 and sell it today you would earn a total of 13.00 from holding American Creek Resources or generate 130.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. American Creek Resources
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| American Creek Resources |
GlaxoSmithKline PLC and American Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and American Creek
The main advantage of trading using opposite GlaxoSmithKline PLC and American Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, American Creek 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 American Creek will offset losses from the drop in American Creek'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 |
| American Creek vs. Ascendant Resources | American Creek vs. Cantex Mine Development | American Creek vs. Amarc Resources | American Creek vs. Sterling Metals Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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