Correlation Between GlaxoSmithKline PLC and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and FVCBankcorp 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 FVCBankcorp 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 FVCBankcorp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and FVCBankcorp 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 FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and FVCBankcorp.
Diversification Opportunities for GlaxoSmithKline PLC and FVCBankcorp
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and FVCBankcorp is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp 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 FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and FVCBankcorp go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and FVCBankcorp
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the FVCBankcorp. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.74 times less risky than FVCBankcorp. The stock trades about -0.3 of its potential returns per unit of risk. The FVCBankcorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,337 in FVCBankcorp on August 28, 2024 and sell it today you would earn a total of 53.00 from holding FVCBankcorp or generate 3.96% 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. FVCBankcorp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| FVCBankcorp |
GlaxoSmithKline PLC and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and FVCBankcorp
The main advantage of trading using opposite GlaxoSmithKline PLC and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp'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 |
| FVCBankcorp vs. Fifth Third Bancorp | FVCBankcorp vs. Zions Bancorporation | FVCBankcorp vs. Huntington Bancshares Incorporated | FVCBankcorp vs. Comerica |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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