Correlation Between GlaxoSmithKline PLC and Allegiant Gold
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Allegiant Gold 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 Allegiant Gold 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 Allegiant Gold, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Allegiant Gold 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 Allegiant Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Allegiant Gold.
Diversification Opportunities for GlaxoSmithKline PLC and Allegiant Gold
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GlaxoSmithKline and Allegiant is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Allegiant Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Gold 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 Allegiant Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Gold has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Allegiant Gold go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Allegiant Gold
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.73 times less return on investment than Allegiant Gold. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.82 times less risky than Allegiant Gold. It trades about 0.17 of its potential returns per unit of risk. Allegiant Gold is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9.16 in Allegiant Gold on November 22, 2024 and sell it today you would earn a total of 2.84 from holding Allegiant Gold or generate 31.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Allegiant Gold
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Allegiant Gold |
GlaxoSmithKline PLC and Allegiant Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Allegiant Gold
The main advantage of trading using opposite GlaxoSmithKline PLC and Allegiant Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Allegiant Gold 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 Allegiant Gold will offset losses from the drop in Allegiant Gold'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 |
| Allegiant Gold vs. Minnova Corp | Allegiant Gold vs. Argo Gold | Allegiant Gold vs. Advance Gold Corp | Allegiant Gold vs. Blue Star Gold |
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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