Correlation Between GlaxoSmithKline PLC and Guggenheim Limited
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Guggenheim Limited 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 Guggenheim Limited 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 Guggenheim Limited Duration, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Guggenheim Limited 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 Guggenheim Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Guggenheim Limited.
Diversification Opportunities for GlaxoSmithKline PLC and Guggenheim Limited
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Guggenheim is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Guggenheim Limited Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Limited 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 Guggenheim Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Limited has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Guggenheim Limited go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Guggenheim Limited
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 23.45 times more return on investment than Guggenheim Limited. However, GlaxoSmithKline PLC is 23.45 times more volatile than Guggenheim Limited Duration. It trades about 0.17 of its potential returns per unit of risk. Guggenheim Limited Duration is currently generating about 0.22 per unit of risk. If you would invest 3,378 in GlaxoSmithKline PLC ADR on November 22, 2024 and sell it today you would earn a total of 276.00 from holding GlaxoSmithKline PLC ADR or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Guggenheim Limited Duration
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Guggenheim Limited |
GlaxoSmithKline PLC and Guggenheim Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Guggenheim Limited
The main advantage of trading using opposite GlaxoSmithKline PLC and Guggenheim Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Guggenheim Limited 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 Guggenheim Limited will offset losses from the drop in Guggenheim Limited'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 |
| Guggenheim Limited vs. Guggenheim Total Return | Guggenheim Limited vs. Guggenheim Floating Rate | Guggenheim Limited vs. Guggenheim Macro Opportunities | Guggenheim Limited vs. Guggenheim Limited Duration |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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