Correlation Between GlaxoSmithKline PLC and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and AMG Advanced 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 AMG Advanced 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 AMG Advanced Metallurgical, you can compare the effects of market volatilities on GlaxoSmithKline PLC and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and AMG Advanced.
Diversification Opportunities for GlaxoSmithKline PLC and AMG Advanced
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlaxoSmithKline and AMG is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and AMG Advanced go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and AMG Advanced
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.35 times more return on investment than AMG Advanced. However, GlaxoSmithKline PLC ADR is 2.88 times less risky than AMG Advanced. It trades about 0.01 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.04 per unit of risk. If you would invest 3,326 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would earn a total of 107.00 from holding GlaxoSmithKline PLC ADR or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.88% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| AMG Advanced Metallu |
GlaxoSmithKline PLC and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and AMG Advanced
The main advantage of trading using opposite GlaxoSmithKline PLC and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced'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 |
| AMG Advanced vs. Huntsman Exploration | AMG Advanced vs. Aurelia Metals Limited | AMG Advanced vs. Adriatic Metals PLC | AMG Advanced vs. American Helium |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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