Correlation Between GlaxoSmithKline PLC and Barnwell Industries
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Barnwell Industries 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 Barnwell Industries 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 Barnwell Industries, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Barnwell Industries 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 Barnwell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Barnwell Industries.
Diversification Opportunities for GlaxoSmithKline PLC and Barnwell Industries
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Barnwell is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Barnwell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnwell Industries 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 Barnwell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnwell Industries has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Barnwell Industries go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Barnwell Industries
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.51 times more return on investment than Barnwell Industries. However, GlaxoSmithKline PLC ADR is 1.95 times less risky than Barnwell Industries. It trades about -0.34 of its potential returns per unit of risk. Barnwell Industries is currently generating about -0.26 per unit of risk. If you would invest 3,755 in GlaxoSmithKline PLC ADR on August 24, 2024 and sell it today you would lose (385.00) from holding GlaxoSmithKline PLC ADR or give up 10.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Barnwell Industries
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Barnwell Industries |
GlaxoSmithKline PLC and Barnwell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Barnwell Industries
The main advantage of trading using opposite GlaxoSmithKline PLC and Barnwell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Barnwell Industries 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 Barnwell Industries will offset losses from the drop in Barnwell Industries' 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 |
| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. Ring Energy | Barnwell Industries vs. Permianville Royalty Trust |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |