Correlation Between GlaxoSmithKline PLC and First Eagle
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and First Eagle 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 First Eagle 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 First Eagle Value, you can compare the effects of market volatilities on GlaxoSmithKline PLC and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and First Eagle.
Diversification Opportunities for GlaxoSmithKline PLC and First Eagle
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and First is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and First Eagle Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Value 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Value has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and First Eagle go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and First Eagle
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 4.37 times less return on investment than First Eagle. In addition to that, GlaxoSmithKline PLC is 1.68 times more volatile than First Eagle Value. It trades about 0.01 of its total potential returns per unit of risk. First Eagle Value is currently generating about 0.09 per unit of volatility. If you would invest 1,701 in First Eagle Value on August 26, 2024 and sell it today you would earn a total of 660.00 from holding First Eagle Value or generate 38.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. First Eagle Value
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| First Eagle Value |
GlaxoSmithKline PLC and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and First Eagle
The main advantage of trading using opposite GlaxoSmithKline PLC and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle'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 |
| First Eagle vs. T Rowe Price | First Eagle vs. Dws Government Money | First Eagle vs. Transamerica Intermediate Muni | First Eagle vs. Nuveen All American 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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