Correlation Between GlaxoSmithKline PLC and ETRACS Alerian
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and ETRACS Alerian 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 ETRACS Alerian 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 ETRACS Alerian Midstream, you can compare the effects of market volatilities on GlaxoSmithKline PLC and ETRACS Alerian 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 ETRACS Alerian. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and ETRACS Alerian.
Diversification Opportunities for GlaxoSmithKline PLC and ETRACS Alerian
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and ETRACS is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and ETRACS Alerian Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Alerian Midstream 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 ETRACS Alerian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Alerian Midstream has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and ETRACS Alerian go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and ETRACS Alerian
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the ETRACS Alerian. In addition to that, GlaxoSmithKline PLC is 1.22 times more volatile than ETRACS Alerian Midstream. It trades about -0.27 of its total potential returns per unit of risk. ETRACS Alerian Midstream is currently generating about 0.49 per unit of volatility. If you would invest 4,927 in ETRACS Alerian Midstream on August 29, 2024 and sell it today you would earn a total of 654.00 from holding ETRACS Alerian Midstream or generate 13.27% 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. ETRACS Alerian Midstream
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| ETRACS Alerian Midstream |
GlaxoSmithKline PLC and ETRACS Alerian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and ETRACS Alerian
The main advantage of trading using opposite GlaxoSmithKline PLC and ETRACS Alerian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, ETRACS Alerian 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 ETRACS Alerian will offset losses from the drop in ETRACS Alerian'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 |
| ETRACS Alerian vs. Global X MLP | ETRACS Alerian vs. Tortoise North American | ETRACS Alerian vs. InfraCap MLP ETF | ETRACS Alerian vs. Barclays ETN Select |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |