Correlation Between GlaxoSmithKline PLC and Brookfield Property
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Brookfield Property 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 Brookfield Property 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 Brookfield Property Partners, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Brookfield Property 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 Brookfield Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Brookfield Property.
Diversification Opportunities for GlaxoSmithKline PLC and Brookfield Property
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Brookfield is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property 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 Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Brookfield Property go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Brookfield Property
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Brookfield Property. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.63 times less risky than Brookfield Property. The stock trades about -0.23 of its potential returns per unit of risk. The Brookfield Property Partners is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,645 in Brookfield Property Partners on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Brookfield Property Partners or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Brookfield Property Partners
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Brookfield Property |
GlaxoSmithKline PLC and Brookfield Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Brookfield Property
The main advantage of trading using opposite GlaxoSmithKline PLC and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Brookfield Property 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 Brookfield Property will offset losses from the drop in Brookfield Property'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 |
| Brookfield Property vs. Brookfield Property Partners | Brookfield Property vs. AGNC Investment Corp | Brookfield Property vs. Brookfield Property Preferred | Brookfield Property vs. AGNC Investment 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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