Correlation Between GlaxoSmithKline PLC and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Meta Platforms 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 Meta Platforms 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 Meta Platforms, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Meta Platforms.
Diversification Opportunities for GlaxoSmithKline PLC and Meta Platforms
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Meta is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Meta Platforms go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Meta Platforms
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Meta Platforms. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.28 times less risky than Meta Platforms. The stock trades about -0.31 of its potential returns per unit of risk. The Meta Platforms is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 53,530 in Meta Platforms on August 28, 2024 and sell it today you would earn a total of 130.00 from holding Meta Platforms or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Meta Platforms
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Meta Platforms |
GlaxoSmithKline PLC and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Meta Platforms
The main advantage of trading using opposite GlaxoSmithKline PLC and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' 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 |
| Meta Platforms vs. Amazon Inc | Meta Platforms vs. Apple Inc | Meta Platforms vs. Meta Platforms | Meta Platforms vs. Microsoft |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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