Correlation Between GlaxoSmithKline PLC and Cox ABG
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Cox ABG 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 Cox ABG 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 Cox ABG Group, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Cox ABG 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 Cox ABG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Cox ABG.
Diversification Opportunities for GlaxoSmithKline PLC and Cox ABG
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between GlaxoSmithKline and Cox is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Cox ABG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cox ABG 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 Cox ABG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cox ABG Group has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Cox ABG go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Cox ABG
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 30.34 times less return on investment than Cox ABG. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.8 times less risky than Cox ABG. It trades about 0.02 of its potential returns per unit of risk. Cox ABG Group is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Cox ABG Group on August 31, 2024 and sell it today you would earn a total of 62.00 from holding Cox ABG Group or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 2.94% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Cox ABG Group
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Cox ABG Group |
GlaxoSmithKline PLC and Cox ABG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Cox ABG
The main advantage of trading using opposite GlaxoSmithKline PLC and Cox ABG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Cox ABG 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 Cox ABG will offset losses from the drop in Cox ABG'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 |
| Cox ABG vs. Industria de Diseno | Cox ABG vs. Iberdrola SA | Cox ABG vs. Banco Santander | Cox ABG vs. Caixabank SA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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