Correlation Between GlaxoSmithKline PLC and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Ebro Foods 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 Ebro Foods 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 Ebro Foods, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Ebro Foods.
Diversification Opportunities for GlaxoSmithKline PLC and Ebro Foods
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Ebro is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Ebro Foods go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Ebro Foods
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Ebro Foods. In addition to that, GlaxoSmithKline PLC is 1.43 times more volatile than Ebro Foods. It trades about -0.23 of its total potential returns per unit of risk. Ebro Foods is currently generating about -0.16 per unit of volatility. If you would invest 1,634 in Ebro Foods on August 31, 2024 and sell it today you would lose (52.00) from holding Ebro Foods or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Ebro Foods
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Ebro Foods |
GlaxoSmithKline PLC and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Ebro Foods
The main advantage of trading using opposite GlaxoSmithKline PLC and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' 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 |
| Ebro Foods vs. Viscofan | Ebro Foods vs. Enags SA | Ebro Foods vs. Mapfre | Ebro Foods vs. Cia de Distribucion |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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