Correlation Between GlaxoSmithKline PLC and Thunderstruck Resources
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Thunderstruck 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 Thunderstruck 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 Thunderstruck Resources, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Thunderstruck 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 Thunderstruck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Thunderstruck Resources.
Diversification Opportunities for GlaxoSmithKline PLC and Thunderstruck Resources
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Thunderstruck is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Thunderstruck Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunderstruck 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 Thunderstruck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunderstruck Resources has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Thunderstruck Resources go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Thunderstruck Resources
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 113.59 times less return on investment than Thunderstruck Resources. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 6.84 times less risky than Thunderstruck Resources. It trades about 0.0 of its potential returns per unit of risk. Thunderstruck Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Thunderstruck Resources on August 25, 2024 and sell it today you would earn a total of 0.50 from holding Thunderstruck Resources or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Thunderstruck Resources
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Thunderstruck Resources |
GlaxoSmithKline PLC and Thunderstruck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Thunderstruck Resources
The main advantage of trading using opposite GlaxoSmithKline PLC and Thunderstruck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Thunderstruck 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 Thunderstruck Resources will offset losses from the drop in Thunderstruck 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 |
| Thunderstruck Resources vs. Asiabasemetals | Thunderstruck Resources vs. Lupaka Gold Corp | Thunderstruck Resources vs. Avrupa Minerals | Thunderstruck Resources vs. Angkor Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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