Correlation Between GlaxoSmithKline PLC and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort Gold, you can compare the effects of market volatilities on GlaxoSmithKline PLC and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and ProShares UltraShort.
Diversification Opportunities for GlaxoSmithKline PLC and ProShares UltraShort
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and ProShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and ProShares UltraShort Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Gold 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Gold has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and ProShares UltraShort go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and ProShares UltraShort
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the ProShares UltraShort. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.28 times less risky than ProShares UltraShort. The stock trades about -0.11 of its potential returns per unit of risk. The ProShares UltraShort Gold is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,127 in ProShares UltraShort Gold on August 28, 2024 and sell it today you would lose (380.00) from holding ProShares UltraShort Gold or give up 17.87% 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. ProShares UltraShort Gold
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| ProShares UltraShort Gold |
GlaxoSmithKline PLC and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and ProShares UltraShort
The main advantage of trading using opposite GlaxoSmithKline PLC and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort'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 |
| ProShares UltraShort vs. ProShares UltraShort Silver | ProShares UltraShort vs. ProShares Ultra Gold | ProShares UltraShort vs. DB Gold Double | ProShares UltraShort vs. DB Gold Short |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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