Correlation Between GlaxoSmithKline PLC and American West
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and American West 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 American West 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 American West Metals, you can compare the effects of market volatilities on GlaxoSmithKline PLC and American West 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 American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and American West.
Diversification Opportunities for GlaxoSmithKline PLC and American West
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GlaxoSmithKline and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West Metals 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 American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and American West go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and American West
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.37 times more return on investment than American West. However, GlaxoSmithKline PLC ADR is 2.67 times less risky than American West. It trades about -0.23 of its potential returns per unit of risk. American West Metals is currently generating about -0.39 per unit of risk. If you would invest 3,634 in GlaxoSmithKline PLC ADR on September 1, 2024 and sell it today you would lose (221.00) from holding GlaxoSmithKline PLC ADR or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. American West Metals
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| American West Metals |
GlaxoSmithKline PLC and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and American West
The main advantage of trading using opposite GlaxoSmithKline PLC and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, American West 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 American West will offset losses from the drop in American West'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 |
| American West vs. Westpac Banking | American West vs. Pinnacle Investment Management | American West vs. Wt Financial Group | American West vs. Regal Funds Management |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |