Correlation Between GlaxoSmithKline PLC and Covivio
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Covivio 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 Covivio 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 Covivio, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Covivio 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 Covivio. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Covivio.
Diversification Opportunities for GlaxoSmithKline PLC and Covivio
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Covivio is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Covivio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio 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 Covivio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Covivio go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Covivio
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 14.33 times less return on investment than Covivio. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.01 times less risky than Covivio. It trades about 0.01 of its potential returns per unit of risk. Covivio is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,865 in Covivio on August 25, 2024 and sell it today you would earn a total of 1,065 from holding Covivio or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 53.33% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Covivio
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Covivio |
GlaxoSmithKline PLC and Covivio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Covivio
The main advantage of trading using opposite GlaxoSmithKline PLC and Covivio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Covivio 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 Covivio will offset losses from the drop in Covivio'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 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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