Correlation Between GlaxoSmithKline PLC and Nuveen Kansas
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Nuveen Kansas 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 Nuveen Kansas 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 Nuveen Kansas Municipal, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Nuveen Kansas 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 Nuveen Kansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Nuveen Kansas.
Diversification Opportunities for GlaxoSmithKline PLC and Nuveen Kansas
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Nuveen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Nuveen Kansas Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Kansas Municipal 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 Nuveen Kansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Kansas Municipal has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Nuveen Kansas go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Nuveen Kansas
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 5.77 times more return on investment than Nuveen Kansas. However, GlaxoSmithKline PLC is 5.77 times more volatile than Nuveen Kansas Municipal. It trades about 0.01 of its potential returns per unit of risk. Nuveen Kansas Municipal is currently generating about 0.05 per unit of risk. If you would invest 3,251 in GlaxoSmithKline PLC ADR on August 25, 2024 and sell it today you would earn a total of 119.00 from holding GlaxoSmithKline PLC ADR or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Nuveen Kansas Municipal
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Nuveen Kansas Municipal |
GlaxoSmithKline PLC and Nuveen Kansas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Nuveen Kansas
The main advantage of trading using opposite GlaxoSmithKline PLC and Nuveen Kansas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Nuveen Kansas 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 Nuveen Kansas will offset losses from the drop in Nuveen Kansas' 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 |
| Nuveen Kansas vs. Nuveen Small Cap | Nuveen Kansas vs. Nuveen Real Estate | Nuveen Kansas vs. Nuveen Real Estate | Nuveen Kansas vs. Nuveen Preferred Securities |
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 Stocks Directory module to find actively traded stocks across global markets.
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