Correlation Between GlaxoSmithKline PLC and COL Financial
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and COL Financial 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 COL Financial 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 COL Financial Group, you can compare the effects of market volatilities on GlaxoSmithKline PLC and COL Financial 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 COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and COL Financial.
Diversification Opportunities for GlaxoSmithKline PLC and COL Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and COL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group 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 COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and COL Financial go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and COL Financial
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.66 times more return on investment than COL Financial. However, GlaxoSmithKline PLC ADR is 1.5 times less risky than COL Financial. It trades about 0.0 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.04 per unit of risk. If you would invest 3,427 in GlaxoSmithKline PLC ADR on August 26, 2024 and sell it today you would lose (57.00) from holding GlaxoSmithKline PLC ADR or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.12% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. COL Financial Group
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| COL Financial Group |
GlaxoSmithKline PLC and COL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and COL Financial
The main advantage of trading using opposite GlaxoSmithKline PLC and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial'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 |
| COL Financial vs. Bright Kindle Resources | COL Financial vs. Allhome Corp | COL Financial vs. Jollibee Foods Corp | COL Financial vs. LFM Properties 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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