Correlation Between GlaxoSmithKline PLC and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Aberdeen Emerging 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 Aberdeen Emerging 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 Aberdeen Emerging Markets, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Aberdeen Emerging 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 Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Aberdeen Emerging.
Diversification Opportunities for GlaxoSmithKline PLC and Aberdeen Emerging
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Aberdeen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets 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 Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Aberdeen Emerging
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Aberdeen Emerging. In addition to that, GlaxoSmithKline PLC is 1.56 times more volatile than Aberdeen Emerging Markets. It trades about -0.27 of its total potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about -0.2 per unit of volatility. If you would invest 1,408 in Aberdeen Emerging Markets on August 29, 2024 and sell it today you would lose (57.00) from holding Aberdeen Emerging Markets or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Aberdeen Emerging Markets |
GlaxoSmithKline PLC and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Aberdeen Emerging
The main advantage of trading using opposite GlaxoSmithKline PLC and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Aberdeen Emerging 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 Aberdeen Emerging will offset losses from the drop in Aberdeen Emerging'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 |
| Aberdeen Emerging vs. T Rowe Price | Aberdeen Emerging vs. Pace Large Growth | Aberdeen Emerging vs. Upright Assets Allocation | Aberdeen Emerging vs. Dodge Cox Stock |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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