Correlation Between GlaxoSmithKline PLC and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Canadian Utilities 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 Canadian Utilities 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 Canadian Utilities Limited, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Canadian Utilities.
Diversification Opportunities for GlaxoSmithKline PLC and Canadian Utilities
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Canadian is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Canadian Utilities go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Canadian Utilities
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.1 times less return on investment than Canadian Utilities. In addition to that, GlaxoSmithKline PLC is 1.05 times more volatile than Canadian Utilities Limited. It trades about 0.02 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.02 per unit of volatility. If you would invest 2,195 in Canadian Utilities Limited on August 31, 2024 and sell it today you would earn a total of 204.00 from holding Canadian Utilities Limited or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.35% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Canadian Utilities Limited
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Canadian Utilities |
GlaxoSmithKline PLC and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Canadian Utilities
The main advantage of trading using opposite GlaxoSmithKline PLC and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' 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 |
| Canadian Utilities vs. LGI Homes | Canadian Utilities vs. Haier Smart Home | Canadian Utilities vs. JJ SNACK FOODS | Canadian Utilities vs. DFS Furniture PLC |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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