Correlation Between GlaxoSmithKline PLC and ENB Financial
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and ENB Financial 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 ENB Financial 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 ENB Financial Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and ENB Financial 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 ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and ENB Financial.
Diversification Opportunities for GlaxoSmithKline PLC and ENB Financial
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and ENB is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp 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 ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and ENB Financial go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and ENB Financial
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the ENB Financial. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.99 times less risky than ENB Financial. The stock trades about -0.33 of its potential returns per unit of risk. The ENB Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,728 in ENB Financial Corp on August 25, 2024 and sell it today you would earn a total of 47.00 from holding ENB Financial Corp or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. ENB Financial Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| ENB Financial Corp |
GlaxoSmithKline PLC and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and ENB Financial
The main advantage of trading using opposite GlaxoSmithKline PLC and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, ENB Financial 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 ENB Financial will offset losses from the drop in ENB Financial'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 |
| ENB Financial vs. Invesco High Income | ENB Financial vs. Blackrock Muniholdings Ny | ENB Financial vs. MFS Investment Grade | ENB Financial vs. Federated Premier Municipal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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