Correlation Between GlaxoSmithKline PLC and Causeway Emerging
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Causeway Emerging 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 Causeway Emerging 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 Causeway Emerging Markets, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Causeway Emerging 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 Causeway Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Causeway Emerging.
Diversification Opportunities for GlaxoSmithKline PLC and Causeway Emerging
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Causeway is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Causeway Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Emerging Markets 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 Causeway Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Emerging Markets has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Causeway Emerging go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Causeway Emerging
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.41 times less return on investment than Causeway Emerging. In addition to that, GlaxoSmithKline PLC is 1.43 times more volatile than Causeway Emerging Markets. It trades about 0.01 of its total potential returns per unit of risk. Causeway Emerging Markets is currently generating about 0.06 per unit of volatility. If you would invest 874.00 in Causeway Emerging Markets on August 26, 2024 and sell it today you would earn a total of 275.00 from holding Causeway Emerging Markets or generate 31.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Causeway Emerging Markets
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Causeway Emerging Markets |
GlaxoSmithKline PLC and Causeway Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Causeway Emerging
The main advantage of trading using opposite GlaxoSmithKline PLC and Causeway Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Causeway Emerging 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 Causeway Emerging will offset losses from the drop in Causeway Emerging'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 |
| Causeway Emerging vs. Causeway International Small | Causeway Emerging vs. Causeway Emerging Markets | Causeway Emerging vs. Causeway Global Value | Causeway Emerging vs. Causeway Global Value |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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