Correlation Between GlaxoSmithKline PLC and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Fidelity Small 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 Fidelity Small 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 Fidelity Small Cap, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Fidelity Small 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 Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Fidelity Small.
Diversification Opportunities for GlaxoSmithKline PLC and Fidelity Small
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Fidelity is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Fidelity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Cap 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 Fidelity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Cap has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Fidelity Small go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Fidelity Small
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Fidelity Small. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.03 times less risky than Fidelity Small. The stock trades about -0.3 of its potential returns per unit of risk. The Fidelity Small Cap is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,389 in Fidelity Small Cap on August 28, 2024 and sell it today you would earn a total of 223.00 from holding Fidelity Small Cap or generate 6.58% 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. Fidelity Small Cap
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Fidelity Small Cap |
GlaxoSmithKline PLC and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Fidelity Small
The main advantage of trading using opposite GlaxoSmithKline PLC and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Fidelity Small 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 Fidelity Small will offset losses from the drop in Fidelity Small'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 |
| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Advisor Mid | Fidelity Small vs. Fidelity Advisor Emerging |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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