Correlation Between GlaxoSmithKline PLC and Covenant Logistics
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Covenant Logistics 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 Covenant Logistics 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 Covenant Logistics Group,, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Covenant Logistics 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 Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Covenant Logistics.
Diversification Opportunities for GlaxoSmithKline PLC and Covenant Logistics
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Covenant is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Covenant Logistics Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics 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 Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics Group, has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Covenant Logistics go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Covenant Logistics
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Covenant Logistics. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.11 times less risky than Covenant Logistics. The stock trades about -0.23 of its potential returns per unit of risk. The Covenant Logistics Group, is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,131 in Covenant Logistics Group, on August 31, 2024 and sell it today you would earn a total of 660.00 from holding Covenant Logistics Group, or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Covenant Logistics Group,
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Covenant Logistics Group, |
GlaxoSmithKline PLC and Covenant Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Covenant Logistics
The main advantage of trading using opposite GlaxoSmithKline PLC and Covenant Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Covenant Logistics 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 Covenant Logistics will offset losses from the drop in Covenant Logistics' 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 |
| Covenant Logistics vs. PAMT P | Covenant Logistics vs. Safe Bulkers | Covenant Logistics vs. Safe Bulkers | Covenant Logistics vs. Atlas 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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