Correlation Between GlaxoSmithKline PLC and Fluence Energy
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Fluence Energy 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 Fluence Energy 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 Fluence Energy, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Fluence Energy 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 Fluence Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Fluence Energy.
Diversification Opportunities for GlaxoSmithKline PLC and Fluence Energy
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Fluence is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Fluence Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluence Energy 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 Fluence Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluence Energy has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Fluence Energy go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Fluence Energy
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.19 times more return on investment than Fluence Energy. However, GlaxoSmithKline PLC ADR is 5.22 times less risky than Fluence Energy. It trades about -0.23 of its potential returns per unit of risk. Fluence Energy is currently generating about -0.07 per unit of risk. If you would invest 3,659 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would lose (226.00) from holding GlaxoSmithKline PLC ADR or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Fluence Energy
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Fluence Energy |
GlaxoSmithKline PLC and Fluence Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Fluence Energy
The main advantage of trading using opposite GlaxoSmithKline PLC and Fluence Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Fluence Energy 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 Fluence Energy will offset losses from the drop in Fluence Energy'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 |
| Fluence Energy vs. Altus Power | Fluence Energy vs. Ormat Technologies | Fluence Energy vs. Enlight Renewable Energy | Fluence Energy vs. Advent Technologies Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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