Correlation Between GlaxoSmithKline PLC and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Alger Smallcap 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 Alger Smallcap 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 Alger Smallcap Growth, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Alger Smallcap 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 Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Alger Smallcap.
Diversification Opportunities for GlaxoSmithKline PLC and Alger Smallcap
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Alger is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Alger Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth 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 Alger Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Alger Smallcap go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Alger Smallcap
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Alger Smallcap. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.15 times less risky than Alger Smallcap. The stock trades about -0.3 of its potential returns per unit of risk. The Alger Smallcap Growth is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,726 in Alger Smallcap Growth on August 30, 2024 and sell it today you would earn a total of 134.00 from holding Alger Smallcap Growth or generate 7.76% 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. Alger Smallcap Growth
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Alger Smallcap Growth |
GlaxoSmithKline PLC and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Alger Smallcap
The main advantage of trading using opposite GlaxoSmithKline PLC and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Alger Smallcap 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 Alger Smallcap will offset losses from the drop in Alger Smallcap'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 |
| Alger Smallcap vs. Putnam Equity Income | Alger Smallcap vs. Putnam Growth Opportunities | Alger Smallcap vs. HUMANA INC | Alger Smallcap vs. Aquagold International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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