Correlation Between GlaxoSmithKline PLC and Virgin Group
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Virgin Group 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 Virgin Group 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 Virgin Group Acquisition, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Virgin Group 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 Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Virgin Group.
Diversification Opportunities for GlaxoSmithKline PLC and Virgin Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Virgin is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition 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 Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Virgin Group go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Virgin Group
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 5.73 times less return on investment than Virgin Group. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 4.59 times less risky than Virgin Group. It trades about 0.01 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 243.00 in Virgin Group Acquisition on August 28, 2024 and sell it today you would lose (107.00) from holding Virgin Group Acquisition or give up 44.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Virgin Group Acquisition
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Virgin Group Acquisition |
GlaxoSmithKline PLC and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Virgin Group
The main advantage of trading using opposite GlaxoSmithKline PLC and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group'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 |
| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |