Correlation Between GlaxoSmithKline PLC and Eventide Healthcare
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Eventide Healthcare 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 Eventide Healthcare 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 Eventide Healthcare Life, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Eventide Healthcare 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 Eventide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Eventide Healthcare.
Diversification Opportunities for GlaxoSmithKline PLC and Eventide Healthcare
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Eventide is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Eventide Healthcare Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Healthcare Life 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 Eventide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Healthcare Life has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Eventide Healthcare go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Eventide Healthcare
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.6 times less return on investment than Eventide Healthcare. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.17 times less risky than Eventide Healthcare. It trades about 0.01 of its potential returns per unit of risk. Eventide Healthcare Life is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,564 in Eventide Healthcare Life on August 30, 2024 and sell it today you would earn a total of 30.00 from holding Eventide Healthcare Life or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Eventide Healthcare Life
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Eventide Healthcare Life |
GlaxoSmithKline PLC and Eventide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Eventide Healthcare
The main advantage of trading using opposite GlaxoSmithKline PLC and Eventide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Eventide Healthcare 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 Eventide Healthcare will offset losses from the drop in Eventide Healthcare'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 |
| Eventide Healthcare vs. Vanguard Energy Fund | Eventide Healthcare vs. Vanguard Dividend Growth | Eventide Healthcare vs. Vanguard Wellington Fund | Eventide Healthcare vs. Vanguard Capital Opportunity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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