Correlation Between GlaxoSmithKline PLC and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Fidelity Advisor 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 Advisor 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 Advisor Energy, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Fidelity Advisor.
Diversification Opportunities for GlaxoSmithKline PLC and Fidelity Advisor
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Fidelity is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Fidelity Advisor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Energy has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Fidelity Advisor go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Fidelity Advisor
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 2.69 times less return on investment than Fidelity Advisor. In addition to that, GlaxoSmithKline PLC is 1.08 times more volatile than Fidelity Advisor Energy. It trades about 0.02 of its total potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.04 per unit of volatility. If you would invest 3,674 in Fidelity Advisor Energy on August 31, 2024 and sell it today you would earn a total of 685.00 from holding Fidelity Advisor Energy or generate 18.64% 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. Fidelity Advisor Energy
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Fidelity Advisor Energy |
GlaxoSmithKline PLC and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Fidelity Advisor
The main advantage of trading using opposite GlaxoSmithKline PLC and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor'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 |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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