Correlation Between GlaxoSmithKline PLC and Amerigo Resources
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Amerigo Resources 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 Amerigo Resources 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 Amerigo Resources, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Amerigo Resources 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 Amerigo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Amerigo Resources.
Diversification Opportunities for GlaxoSmithKline PLC and Amerigo Resources
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Amerigo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Amerigo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerigo Resources 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 Amerigo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerigo Resources has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Amerigo Resources go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Amerigo Resources
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Amerigo Resources. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.92 times less risky than Amerigo Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Amerigo Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Amerigo Resources on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Amerigo Resources or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Amerigo Resources
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Amerigo Resources |
GlaxoSmithKline PLC and Amerigo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Amerigo Resources
The main advantage of trading using opposite GlaxoSmithKline PLC and Amerigo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Amerigo Resources 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 Amerigo Resources will offset losses from the drop in Amerigo Resources' 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 |
| Amerigo Resources vs. Ascendant Resources | Amerigo Resources vs. Cantex Mine Development | Amerigo Resources vs. Amarc Resources | Amerigo Resources vs. Sterling Metals Corp |
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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