Correlation Between GlaxoSmithKline PLC and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Eafe Fund 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 Eafe Fund 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 The Eafe Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Eafe Fund 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 Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Eafe Fund.
Diversification Opportunities for GlaxoSmithKline PLC and Eafe Fund
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Eafe is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund 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 Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Eafe Fund go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Eafe Fund
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Eafe Fund. In addition to that, GlaxoSmithKline PLC is 1.63 times more volatile than The Eafe Fund. It trades about -0.3 of its total potential returns per unit of risk. The Eafe Fund is currently generating about -0.06 per unit of volatility. If you would invest 1,400 in The Eafe Fund on August 28, 2024 and sell it today you would lose (15.00) from holding The Eafe Fund or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. The Eafe Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Eafe Fund |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
GlaxoSmithKline PLC and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Eafe Fund
The main advantage of trading using opposite GlaxoSmithKline PLC and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund'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 |
| Eafe Fund vs. Royce Opportunity Fund | Eafe Fund vs. Boston Partners Small | Eafe Fund vs. Hennessy Nerstone Mid | Eafe Fund vs. Ab Discovery Value |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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