Correlation Between GlaxoSmithKline PLC and Austin Engineering
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Austin Engineering 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 Austin Engineering 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 Austin Engineering Limited, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Austin Engineering 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 Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Austin Engineering.
Diversification Opportunities for GlaxoSmithKline PLC and Austin Engineering
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Austin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering 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 Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Austin Engineering go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Austin Engineering
If you would invest 30.00 in Austin Engineering Limited on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Austin Engineering Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Austin Engineering Limited
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Austin Engineering |
GlaxoSmithKline PLC and Austin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Austin Engineering
The main advantage of trading using opposite GlaxoSmithKline PLC and Austin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Austin Engineering 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 Austin Engineering will offset losses from the drop in Austin Engineering'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 |
| Austin Engineering vs. American Premium Water | Austin Engineering vs. AmeraMex International | Austin Engineering vs. Arts Way Manufacturing Co | Austin Engineering vs. Astec Industries |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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