Correlation Between GlaxoSmithKline PLC and Alger Mid
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Alger Mid 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 Mid 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 Mid Cap, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Alger Mid 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 Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Alger Mid.
Diversification Opportunities for GlaxoSmithKline PLC and Alger Mid
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Alger is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Alger Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Mid Cap 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Mid Cap has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Alger Mid go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Alger Mid
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Alger Mid. In addition to that, GlaxoSmithKline PLC is 1.11 times more volatile than Alger Mid Cap. It trades about -0.3 of its total potential returns per unit of risk. Alger Mid Cap is currently generating about 0.37 per unit of volatility. If you would invest 1,977 in Alger Mid Cap on August 28, 2024 and sell it today you would earn a total of 209.00 from holding Alger Mid Cap or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Alger Mid Cap
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Alger Mid Cap |
GlaxoSmithKline PLC and Alger Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Alger Mid
The main advantage of trading using opposite GlaxoSmithKline PLC and Alger Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Alger Mid 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 Mid will offset losses from the drop in Alger Mid'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 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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