Correlation Between GlaxoSmithKline PLC and Capital Counties
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Capital Counties 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 Capital Counties 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 Capital Counties Properties, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Capital Counties 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 Capital Counties. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Capital Counties.
Diversification Opportunities for GlaxoSmithKline PLC and Capital Counties
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Capital is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Capital Counties Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Counties Pro 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 Capital Counties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Counties Pro has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Capital Counties go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Capital Counties
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Capital Counties. In addition to that, GlaxoSmithKline PLC is 1.02 times more volatile than Capital Counties Properties. It trades about -0.22 of its total potential returns per unit of risk. Capital Counties Properties is currently generating about -0.1 per unit of volatility. If you would invest 172.00 in Capital Counties Properties on August 26, 2024 and sell it today you would lose (18.00) from holding Capital Counties Properties or give up 10.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.48% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Capital Counties Properties
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Capital Counties Pro |
GlaxoSmithKline PLC and Capital Counties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Capital Counties
The main advantage of trading using opposite GlaxoSmithKline PLC and Capital Counties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Capital Counties 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 Capital Counties will offset losses from the drop in Capital Counties' 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 |
| Capital Counties vs. CarsalesCom | Capital Counties vs. MINCO SILVER | Capital Counties vs. CeoTronics AG | Capital Counties vs. Jupiter Fund Management |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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