Correlation Between GlaxoSmithKline PLC and Banco BTG
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Banco BTG 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 Banco BTG 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 Banco BTG Pactual, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Banco BTG 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 Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Banco BTG.
Diversification Opportunities for GlaxoSmithKline PLC and Banco BTG
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Banco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual 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 Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Banco BTG go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Banco BTG
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 7.57 times less return on investment than Banco BTG. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.87 times less risky than Banco BTG. It trades about 0.01 of its potential returns per unit of risk. Banco BTG Pactual is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Banco BTG Pactual on August 27, 2024 and sell it today you would earn a total of 569.00 from holding Banco BTG Pactual or generate 56.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Banco BTG Pactual
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Banco BTG Pactual |
GlaxoSmithKline PLC and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Banco BTG
The main advantage of trading using opposite GlaxoSmithKline PLC and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Banco BTG 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 Banco BTG will offset losses from the drop in Banco BTG'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 |
| Banco BTG vs. Fras le SA | Banco BTG vs. Clave Indices De | Banco BTG vs. BTG Pactual Logstica | Banco BTG vs. Telefonaktiebolaget LM Ericsson |
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.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |