Correlation Between GlaxoSmithKline PLC and Great Wes
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Great Wes 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 Great Wes 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 Great Wes 515, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Great Wes 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 Great Wes. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Great Wes.
Diversification Opportunities for GlaxoSmithKline PLC and Great Wes
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Great is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Great Wes 515 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wes 515 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 Great Wes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wes 515 has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Great Wes go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Great Wes
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Great Wes. In addition to that, GlaxoSmithKline PLC is 2.81 times more volatile than Great Wes 515. It trades about -0.31 of its total potential returns per unit of risk. Great Wes 515 is currently generating about -0.17 per unit of volatility. If you would invest 2,173 in Great Wes 515 on August 28, 2024 and sell it today you would lose (41.00) from holding Great Wes 515 or give up 1.89% 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. Great Wes 515
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Great Wes 515 |
GlaxoSmithKline PLC and Great Wes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Great Wes
The main advantage of trading using opposite GlaxoSmithKline PLC and Great Wes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Great Wes 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 Great Wes will offset losses from the drop in Great Wes' 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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