Correlation Between GlaxoSmithKline PLC and Coloseum Holding
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Coloseum Holding 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 Coloseum Holding 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 Coloseum Holding as, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Coloseum Holding 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 Coloseum Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Coloseum Holding.
Diversification Opportunities for GlaxoSmithKline PLC and Coloseum Holding
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GlaxoSmithKline and Coloseum is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Coloseum Holding as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloseum Holding 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 Coloseum Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloseum Holding has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Coloseum Holding go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Coloseum Holding
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.29 times more return on investment than Coloseum Holding. However, GlaxoSmithKline PLC ADR is 3.46 times less risky than Coloseum Holding. It trades about -0.23 of its potential returns per unit of risk. Coloseum Holding as is currently generating about -0.09 per unit of risk. If you would invest 3,634 in GlaxoSmithKline PLC ADR on September 1, 2024 and sell it today you would lose (221.00) from holding GlaxoSmithKline PLC ADR or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Coloseum Holding as
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Coloseum Holding |
GlaxoSmithKline PLC and Coloseum Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Coloseum Holding
The main advantage of trading using opposite GlaxoSmithKline PLC and Coloseum Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Coloseum Holding 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 Coloseum Holding will offset losses from the drop in Coloseum Holding'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 |
| Coloseum Holding vs. Volkswagen AG | Coloseum Holding vs. GEVORKYAN as | Coloseum Holding vs. Philip Morris CR | Coloseum Holding vs. Tatry Mountain Resorts |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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