Correlation Between GlaxoSmithKline PLC and Mid Cap
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Mid Cap 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 Mid Cap 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 Mid Cap Value, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Mid Cap.
Diversification Opportunities for GlaxoSmithKline PLC and Mid Cap
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Mid is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Mid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Mid Cap go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Mid Cap
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.4 times less return on investment than Mid Cap. In addition to that, GlaxoSmithKline PLC is 1.66 times more volatile than Mid Cap Value. It trades about 0.01 of its total potential returns per unit of risk. Mid Cap Value is currently generating about 0.03 per unit of volatility. If you would invest 1,607 in Mid Cap Value on August 26, 2024 and sell it today you would earn a total of 159.00 from holding Mid Cap Value or generate 9.89% 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. Mid Cap Value
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Mid Cap Value |
GlaxoSmithKline PLC and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Mid Cap
The main advantage of trading using opposite GlaxoSmithKline PLC and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap'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 |
| Mid Cap vs. Janus Triton Fund | Mid Cap vs. New World Fund | Mid Cap vs. Fidelity Mid Cap | Mid Cap vs. Mfs Value Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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