Correlation Between GlaxoSmithKline PLC and Buffalo Discovery
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Buffalo Discovery 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 Buffalo Discovery 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 Buffalo Discovery Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Buffalo Discovery 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 Buffalo Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Buffalo Discovery.
Diversification Opportunities for GlaxoSmithKline PLC and Buffalo Discovery
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Buffalo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Buffalo Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Discovery 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 Buffalo Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Discovery has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Buffalo Discovery go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Buffalo Discovery
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Buffalo Discovery. In addition to that, GlaxoSmithKline PLC is 1.24 times more volatile than Buffalo Discovery Fund. It trades about -0.28 of its total potential returns per unit of risk. Buffalo Discovery Fund is currently generating about 0.21 per unit of volatility. If you would invest 2,536 in Buffalo Discovery Fund on August 26, 2024 and sell it today you would earn a total of 134.00 from holding Buffalo Discovery Fund or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Buffalo Discovery Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Buffalo Discovery |
GlaxoSmithKline PLC and Buffalo Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Buffalo Discovery
The main advantage of trading using opposite GlaxoSmithKline PLC and Buffalo Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Buffalo Discovery 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 Buffalo Discovery will offset losses from the drop in Buffalo Discovery'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 |
| Buffalo Discovery vs. Buffalo Mid Cap | Buffalo Discovery vs. Large Cap Fund | Buffalo Discovery vs. Buffalo Small Cap | Buffalo Discovery vs. Schwab Health Care |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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