Correlation Between GlaxoSmithKline PLC and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Genco Shipping 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 Genco Shipping 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 Genco Shipping Trading, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Genco Shipping 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 Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Genco Shipping.
Diversification Opportunities for GlaxoSmithKline PLC and Genco Shipping
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GlaxoSmithKline and Genco is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Genco Shipping go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Genco Shipping
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Genco Shipping. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.19 times less risky than Genco Shipping. The stock trades about -0.33 of its potential returns per unit of risk. The Genco Shipping Trading is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,530 in Genco Shipping Trading on August 27, 2024 and sell it today you would earn a total of 156.00 from holding Genco Shipping Trading or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Genco Shipping Trading
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Genco Shipping Trading |
GlaxoSmithKline PLC and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Genco Shipping
The main advantage of trading using opposite GlaxoSmithKline PLC and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping'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 |
| Genco Shipping vs. Star Bulk Carriers | Genco Shipping vs. Golden Ocean Group | Genco Shipping vs. Global Ship Lease | Genco Shipping vs. Danaos |
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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