Correlation Between GlaxoSmithKline PLC and Cencora
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Cencora 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 Cencora 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 Cencora, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Cencora 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 Cencora. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Cencora.
Diversification Opportunities for GlaxoSmithKline PLC and Cencora
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Cencora is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Cencora go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Cencora
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 5.26 times less return on investment than Cencora. In addition to that, GlaxoSmithKline PLC is 1.24 times more volatile than Cencora. It trades about 0.02 of its total potential returns per unit of risk. Cencora is currently generating about 0.1 per unit of volatility. If you would invest 17,399 in Cencora on August 31, 2024 and sell it today you would earn a total of 7,756 from holding Cencora or generate 44.58% 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. Cencora
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Cencora |
GlaxoSmithKline PLC and Cencora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Cencora
The main advantage of trading using opposite GlaxoSmithKline PLC and Cencora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Cencora 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 Cencora will offset losses from the drop in Cencora'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 |
| Cencora vs. Parker Hannifin | Cencora vs. Grupo Aeroportuario del | Cencora vs. Griffon | Cencora vs. Harmony Gold Mining |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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