Correlation Between GlaxoSmithKline PLC and InfraCap MLP
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and InfraCap MLP 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 InfraCap MLP 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 InfraCap MLP ETF, you can compare the effects of market volatilities on GlaxoSmithKline PLC and InfraCap MLP 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 InfraCap MLP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and InfraCap MLP.
Diversification Opportunities for GlaxoSmithKline PLC and InfraCap MLP
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and InfraCap is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and InfraCap MLP ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfraCap MLP ETF 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 InfraCap MLP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfraCap MLP ETF has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and InfraCap MLP go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and InfraCap MLP
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the InfraCap MLP. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.03 times less risky than InfraCap MLP. The stock trades about -0.23 of its potential returns per unit of risk. The InfraCap MLP ETF is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 3,973 in InfraCap MLP ETF on August 31, 2024 and sell it today you would earn a total of 769.00 from holding InfraCap MLP ETF or generate 19.36% 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. InfraCap MLP ETF
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| InfraCap MLP ETF |
GlaxoSmithKline PLC and InfraCap MLP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and InfraCap MLP
The main advantage of trading using opposite GlaxoSmithKline PLC and InfraCap MLP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, InfraCap MLP 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 InfraCap MLP will offset losses from the drop in InfraCap MLP'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 |
| InfraCap MLP vs. Virtus InfraCap Preferred | InfraCap MLP vs. Global X MLP | InfraCap MLP vs. Amplify High Income | InfraCap MLP vs. Alerian MLP ETF |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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