Correlation Between GlaxoSmithKline PLC and Galway Metals
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Galway Metals 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 Galway Metals 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 Galway Metals, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Galway Metals 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 Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Galway Metals.
Diversification Opportunities for GlaxoSmithKline PLC and Galway Metals
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Galway is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals 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 Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Galway Metals go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Galway Metals
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.39 times less return on investment than Galway Metals. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 3.82 times less risky than Galway Metals. It trades about 0.01 of its potential returns per unit of risk. Galway Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Galway Metals on August 30, 2024 and sell it today you would lose (17.00) from holding Galway Metals or give up 26.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Galway Metals
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Galway Metals |
GlaxoSmithKline PLC and Galway Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Galway Metals
The main advantage of trading using opposite GlaxoSmithKline PLC and Galway Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Galway Metals 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 Galway Metals will offset losses from the drop in Galway Metals' 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 |
| Galway Metals vs. First Majestic Silver | Galway Metals vs. Ivanhoe Energy | Galway Metals vs. Orezone Gold Corp | Galway Metals vs. Faraday Copper Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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