Correlation Between GlaxoSmithKline PLC and Black Mountain
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Black Mountain 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 Black Mountain 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 Black Mountain Acquisition, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Black Mountain 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 Black Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Black Mountain.
Diversification Opportunities for GlaxoSmithKline PLC and Black Mountain
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Black is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Black Mountain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Mountain Acqui 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 Black Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Mountain Acqui has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Black Mountain go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Black Mountain
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.94 times less return on investment than Black Mountain. In addition to that, GlaxoSmithKline PLC is 6.85 times more volatile than Black Mountain Acquisition. It trades about 0.01 of its total potential returns per unit of risk. Black Mountain Acquisition is currently generating about 0.16 per unit of volatility. If you would invest 1,011 in Black Mountain Acquisition on August 26, 2024 and sell it today you would earn a total of 50.00 from holding Black Mountain Acquisition or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 31.79% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Black Mountain Acquisition
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Black Mountain Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GlaxoSmithKline PLC and Black Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Black Mountain
The main advantage of trading using opposite GlaxoSmithKline PLC and Black Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Black Mountain 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 Black Mountain will offset losses from the drop in Black Mountain'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 |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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