Correlation Between GlaxoSmithKline PLC and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Amadeus IT 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 Amadeus IT 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 Amadeus IT Group, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Amadeus IT.
Diversification Opportunities for GlaxoSmithKline PLC and Amadeus IT
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Amadeus is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group 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 Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Amadeus IT go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Amadeus IT
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Amadeus IT. In addition to that, GlaxoSmithKline PLC is 1.09 times more volatile than Amadeus IT Group. It trades about -0.23 of its total potential returns per unit of risk. Amadeus IT Group is currently generating about -0.08 per unit of volatility. If you would invest 6,754 in Amadeus IT Group on August 31, 2024 and sell it today you would lose (150.00) from holding Amadeus IT Group or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Amadeus IT Group
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Amadeus IT Group |
GlaxoSmithKline PLC and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Amadeus IT
The main advantage of trading using opposite GlaxoSmithKline PLC and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT'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 |
| Amadeus IT vs. Apollo Investment Corp | Amadeus IT vs. REGAL ASIAN INVESTMENTS | Amadeus IT vs. CapitaLand Investment Limited | Amadeus IT vs. MAGIC SOFTWARE ENTR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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