Correlation Between GlaxoSmithKline PLC and Charlottes Web
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Charlottes Web 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 Charlottes Web 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 Charlottes Web Holdings, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Charlottes Web 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 Charlottes Web. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Charlottes Web.
Diversification Opportunities for GlaxoSmithKline PLC and Charlottes Web
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Charlottes is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings 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 Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Charlottes Web go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Charlottes Web
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.25 times more return on investment than Charlottes Web. However, GlaxoSmithKline PLC ADR is 4.06 times less risky than Charlottes Web. It trades about 0.01 of its potential returns per unit of risk. Charlottes Web Holdings is currently generating about -0.04 per unit of risk. If you would invest 3,251 in GlaxoSmithKline PLC ADR on August 26, 2024 and sell it today you would earn a total of 119.00 from holding GlaxoSmithKline PLC ADR or generate 3.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Charlottes Web Holdings
Performance |
Timeline |
GlaxoSmithKline PLC ADR |
Charlottes Web Holdings |
GlaxoSmithKline PLC and Charlottes Web Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GlaxoSmithKline PLC and Charlottes Web
The main advantage of trading using opposite GlaxoSmithKline PLC and Charlottes Web positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Charlottes Web 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 Charlottes Web will offset losses from the drop in Charlottes Web'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 |
Charlottes Web vs. Green Cures Botanical | Charlottes Web vs. Galexxy Holdings | Charlottes Web vs. Indoor Harvest Corp | Charlottes Web vs. Speakeasy Cannabis Club |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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