Correlation Between GlaxoSmithKline PLC and Dreyfus International
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Dreyfus International 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 Dreyfus International 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 Dreyfus International Bond, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Dreyfus International 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 Dreyfus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Dreyfus International.
Diversification Opportunities for GlaxoSmithKline PLC and Dreyfus International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Dreyfus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Dreyfus International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International 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 Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Dreyfus International go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Dreyfus International
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Dreyfus International. In addition to that, GlaxoSmithKline PLC is 3.33 times more volatile than Dreyfus International Bond. It trades about -0.01 of its total potential returns per unit of risk. Dreyfus International Bond is currently generating about -0.02 per unit of volatility. If you would invest 1,297 in Dreyfus International Bond on August 25, 2024 and sell it today you would lose (30.00) from holding Dreyfus International Bond or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Dreyfus International Bond
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Dreyfus International |
GlaxoSmithKline PLC and Dreyfus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Dreyfus International
The main advantage of trading using opposite GlaxoSmithKline PLC and Dreyfus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Dreyfus International 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 Dreyfus International will offset losses from the drop in Dreyfus International'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 |
| Dreyfus International vs. Dreyfus High Yield | Dreyfus International vs. Dreyfusthe Boston Pany | Dreyfus International vs. Dreyfus International Bond | Dreyfus International vs. Dreyfus International Equity |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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