Correlation Between GlaxoSmithKline PLC and Cambria Foreign
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Cambria Foreign 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 Cambria Foreign 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 Cambria Foreign Shareholder, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Cambria Foreign 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 Cambria Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Cambria Foreign.
Diversification Opportunities for GlaxoSmithKline PLC and Cambria Foreign
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Cambria is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Cambria Foreign Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Foreign Shar 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 Cambria Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Foreign Shar has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Cambria Foreign go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Cambria Foreign
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Cambria Foreign. In addition to that, GlaxoSmithKline PLC is 1.29 times more volatile than Cambria Foreign Shareholder. It trades about -0.24 of its total potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about -0.07 per unit of volatility. If you would invest 2,670 in Cambria Foreign Shareholder on August 31, 2024 and sell it today you would lose (42.00) from holding Cambria Foreign Shareholder or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Cambria Foreign Shareholder
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Cambria Foreign Shar |
GlaxoSmithKline PLC and Cambria Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Cambria Foreign
The main advantage of trading using opposite GlaxoSmithKline PLC and Cambria Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Cambria Foreign 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 Cambria Foreign will offset losses from the drop in Cambria Foreign'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 |
| Cambria Foreign vs. Schwab Fundamental International | Cambria Foreign vs. Schwab Fundamental Emerging | Cambria Foreign vs. Schwab Fundamental Small | Cambria Foreign vs. Schwab Fundamental Large |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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