Correlation Between GlaxoSmithKline PLC and Alfa SAB
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Alfa SAB 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 Alfa SAB 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 Alfa SAB de, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Alfa SAB 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 Alfa SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Alfa SAB.
Diversification Opportunities for GlaxoSmithKline PLC and Alfa SAB
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Alfa is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Alfa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa SAB de 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 Alfa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa SAB de has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Alfa SAB go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Alfa SAB
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 54.13 times less return on investment than Alfa SAB. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.66 times less risky than Alfa SAB. It trades about 0.0 of its potential returns per unit of risk. Alfa SAB de is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Alfa SAB de on August 24, 2024 and sell it today you would earn a total of 321.00 from holding Alfa SAB de or generate 28.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Alfa SAB de
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Alfa SAB de |
GlaxoSmithKline PLC and Alfa SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Alfa SAB
The main advantage of trading using opposite GlaxoSmithKline PLC and Alfa SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Alfa SAB 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 Alfa SAB will offset losses from the drop in Alfa SAB'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 |
| Alfa SAB vs. Grupo Financiero Inbursa | Alfa SAB vs. Kimberly Clark de Mxico | Alfa SAB vs. Grupo Televisa SAB | Alfa SAB vs. Grupo Bimbo SAB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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