Correlation Between GlaxoSmithKline PLC and Fidelity Investment
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Fidelity Investment 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 Investment 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 Investment Grade, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Fidelity Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Fidelity Investment.
Diversification Opportunities for GlaxoSmithKline PLC and Fidelity Investment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Fidelity Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Investment Grade 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Investment Grade has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Fidelity Investment go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Fidelity Investment
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 2.55 times less return on investment than Fidelity Investment. In addition to that, GlaxoSmithKline PLC is 3.1 times more volatile than Fidelity Investment Grade. It trades about 0.0 of its total potential returns per unit of risk. Fidelity Investment Grade is currently generating about 0.03 per unit of volatility. If you would invest 4,111 in Fidelity Investment Grade on August 26, 2024 and sell it today you would earn a total of 163.00 from holding Fidelity Investment Grade or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Fidelity Investment Grade
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Fidelity Investment Grade |
GlaxoSmithKline PLC and Fidelity Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Fidelity Investment
The main advantage of trading using opposite GlaxoSmithKline PLC and Fidelity Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Fidelity Investment 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 Investment will offset losses from the drop in Fidelity Investment'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 Investment vs. iShares MSCI EAFE | Fidelity Investment vs. iShares iBoxx Investment | Fidelity Investment vs. iShares TIPS Bond | Fidelity Investment vs. iShares 1 3 Year |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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