Correlation Between GlaxoSmithKline PLC and Digihost Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Digihost Technology 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 Digihost Technology 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 Digihost Technology, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Digihost Technology 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 Digihost Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Digihost Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Digihost Technology
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Digihost is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Digihost Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digihost Technology 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 Digihost Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digihost Technology has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Digihost Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Digihost Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 13.89 times less return on investment than Digihost Technology. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 4.64 times less risky than Digihost Technology. It trades about 0.02 of its potential returns per unit of risk. Digihost Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Digihost Technology on August 31, 2024 and sell it today you would earn a total of 62.00 from holding Digihost Technology or generate 42.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Digihost Technology
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Digihost Technology |
GlaxoSmithKline PLC and Digihost Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Digihost Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Digihost Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Digihost Technology 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 Digihost Technology will offset losses from the drop in Digihost Technology'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 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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