Correlation Between GlaxoSmithKline PLC and Income Growth
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Income Growth 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 Income Growth 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 Income Growth Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Income Growth 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 Income Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Income Growth.
Diversification Opportunities for GlaxoSmithKline PLC and Income Growth
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Income is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Income Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income 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 Income Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Growth has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Income Growth go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Income Growth
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Income Growth. In addition to that, GlaxoSmithKline PLC is 1.63 times more volatile than Income Growth Fund. It trades about -0.3 of its total potential returns per unit of risk. Income Growth Fund is currently generating about 0.29 per unit of volatility. If you would invest 3,740 in Income Growth Fund on August 30, 2024 and sell it today you would earn a total of 198.00 from holding Income Growth Fund or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Income Growth Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Income Growth |
GlaxoSmithKline PLC and Income Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Income Growth
The main advantage of trading using opposite GlaxoSmithKline PLC and Income Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Income Growth 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 Income Growth will offset losses from the drop in Income Growth'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 |
| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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