Correlation Between GlaxoSmithKline PLC and GIMV NV
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and GIMV NV 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 GIMV NV 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 GIMV NV, you can compare the effects of market volatilities on GlaxoSmithKline PLC and GIMV NV 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 GIMV NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and GIMV NV.
Diversification Opportunities for GlaxoSmithKline PLC and GIMV NV
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and GIMV is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV NV 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 GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and GIMV NV go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and GIMV NV
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the GIMV NV. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.3 times less risky than GIMV NV. The stock trades about -0.33 of its potential returns per unit of risk. The GIMV NV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,900 in GIMV NV on August 27, 2024 and sell it today you would earn a total of 185.00 from holding GIMV NV or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. GIMV NV
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| GIMV NV |
GlaxoSmithKline PLC and GIMV NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and GIMV NV
The main advantage of trading using opposite GlaxoSmithKline PLC and GIMV NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, GIMV NV 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 GIMV NV will offset losses from the drop in GIMV NV'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 |
| GIMV NV vs. Groep Brussel Lambert | GIMV NV vs. Sofina Socit Anonyme | GIMV NV vs. Ackermans Van Haaren | GIMV NV vs. KBC Ancora |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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