Correlation Between GlaxoSmithKline PLC and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and PREMIER FOODS 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 PREMIER FOODS 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 PREMIER FOODS, you can compare the effects of market volatilities on GlaxoSmithKline PLC and PREMIER FOODS 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 PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and PREMIER FOODS.
Diversification Opportunities for GlaxoSmithKline PLC and PREMIER FOODS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and PREMIER is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and PREMIER FOODS go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and PREMIER FOODS
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the PREMIER FOODS. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.09 times less risky than PREMIER FOODS. The stock trades about -0.34 of its potential returns per unit of risk. The PREMIER FOODS is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 228.00 in PREMIER FOODS on August 24, 2024 and sell it today you would lose (6.00) from holding PREMIER FOODS or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. PREMIER FOODS
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| PREMIER FOODS |
GlaxoSmithKline PLC and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and PREMIER FOODS
The main advantage of trading using opposite GlaxoSmithKline PLC and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS'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 |
| PREMIER FOODS vs. Sumitomo Rubber Industries | PREMIER FOODS vs. Nufarm Limited | PREMIER FOODS vs. EAGLE MATERIALS | PREMIER FOODS vs. JAPAN TOBACCO UNSPADR12 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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