Correlation Between GlaxoSmithKline PLC and Victory Sycamore

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Victory Sycamore 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 Victory Sycamore 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 Victory Sycamore Established, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Victory Sycamore 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 Victory Sycamore. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Victory Sycamore.

Diversification Opportunities for GlaxoSmithKline PLC and Victory Sycamore

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GlaxoSmithKline and Victory is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Victory Sycamore Established in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Sycamore Est 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 Victory Sycamore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Sycamore Est has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Victory Sycamore go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and Victory Sycamore

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Victory Sycamore. In addition to that, GlaxoSmithKline PLC is 2.05 times more volatile than Victory Sycamore Established. It trades about -0.26 of its total potential returns per unit of risk. Victory Sycamore Established is currently generating about 0.05 per unit of volatility. If you would invest  5,144  in Victory Sycamore Established on August 25, 2024 and sell it today you would earn a total of  79.00  from holding Victory Sycamore Established or generate 1.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GlaxoSmithKline PLC ADR  vs.  Victory Sycamore Established

 Performance 
       Timeline  
GlaxoSmithKline PLC ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Victory Sycamore Est 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Victory Sycamore Established are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Victory Sycamore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GlaxoSmithKline PLC and Victory Sycamore Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline PLC and Victory Sycamore

The main advantage of trading using opposite GlaxoSmithKline PLC and Victory Sycamore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Victory Sycamore 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 Victory Sycamore will offset losses from the drop in Victory Sycamore's long position.
The idea behind GlaxoSmithKline PLC ADR and Victory Sycamore Established pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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