Correlation Between GlaxoSmithKline PLC and Empire Petroleum
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Empire Petroleum 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 Empire Petroleum 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 Empire Petroleum Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Empire Petroleum 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 Empire Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Empire Petroleum.
Diversification Opportunities for GlaxoSmithKline PLC and Empire Petroleum
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Empire is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Empire Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Petroleum 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 Empire Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Petroleum Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Empire Petroleum go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Empire Petroleum
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Empire Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.62 times less risky than Empire Petroleum. The stock trades about -0.11 of its potential returns per unit of risk. The Empire Petroleum Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 792.00 in Empire Petroleum Corp on August 28, 2024 and sell it today you would lose (217.00) from holding Empire Petroleum Corp or give up 27.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Empire Petroleum Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Empire Petroleum Corp |
GlaxoSmithKline PLC and Empire Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Empire Petroleum
The main advantage of trading using opposite GlaxoSmithKline PLC and Empire Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Empire Petroleum 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 Empire Petroleum will offset losses from the drop in Empire Petroleum'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 |
| Empire Petroleum vs. Devon Energy | Empire Petroleum vs. ConocoPhillips | Empire Petroleum vs. Occidental Petroleum | Empire Petroleum vs. Permian Resources |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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