Correlation Between GlaxoSmithKline PLC and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Advantage Solutions 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 Advantage Solutions 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 Advantage Solutions, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Advantage Solutions 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 Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Advantage Solutions.
Diversification Opportunities for GlaxoSmithKline PLC and Advantage Solutions
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Advantage is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions 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 Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Advantage Solutions go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Advantage Solutions
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 21.46 times less return on investment than Advantage Solutions. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 3.04 times less risky than Advantage Solutions. It trades about 0.01 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Advantage Solutions on August 28, 2024 and sell it today you would earn a total of 146.00 from holding Advantage Solutions or generate 68.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Advantage Solutions
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Advantage Solutions |
GlaxoSmithKline PLC and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Advantage Solutions
The main advantage of trading using opposite GlaxoSmithKline PLC and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' 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 |
| Advantage Solutions vs. ADTRAN Inc | Advantage Solutions vs. Belden Inc | Advantage Solutions vs. ADC Therapeutics SA | Advantage Solutions vs. Comtech Telecommunications 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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