Correlation Between GlaxoSmithKline PLC and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Fidelity Freedom 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 Freedom 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 Freedom Blend, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Fidelity Freedom 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 Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Fidelity Freedom.
Diversification Opportunities for GlaxoSmithKline PLC and Fidelity Freedom
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Fidelity is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Fidelity Freedom Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom Blend 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 Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom Blend has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Fidelity Freedom go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Fidelity Freedom
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Fidelity Freedom. In addition to that, GlaxoSmithKline PLC is 4.53 times more volatile than Fidelity Freedom Blend. It trades about -0.33 of its total potential returns per unit of risk. Fidelity Freedom Blend is currently generating about -0.01 per unit of volatility. If you would invest 1,032 in Fidelity Freedom Blend on August 27, 2024 and sell it today you would lose (1.00) from holding Fidelity Freedom Blend or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Fidelity Freedom Blend
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Fidelity Freedom Blend |
GlaxoSmithKline PLC and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Fidelity Freedom
The main advantage of trading using opposite GlaxoSmithKline PLC and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Fidelity Freedom 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 Freedom will offset losses from the drop in Fidelity Freedom'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 Freedom vs. Fidelity Freedom 2015 | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Puritan Fund | Fidelity Freedom vs. Fidelity Pennsylvania 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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