Correlation Between GlaxoSmithKline PLC and Hennessy Balanced
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Hennessy Balanced 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 Hennessy Balanced 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 Hennessy Balanced Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Hennessy Balanced 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 Hennessy Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Hennessy Balanced.
Diversification Opportunities for GlaxoSmithKline PLC and Hennessy Balanced
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Hennessy is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Hennessy Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Balanced 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 Hennessy Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Balanced has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Hennessy Balanced go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Hennessy Balanced
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Hennessy Balanced. In addition to that, GlaxoSmithKline PLC is 3.52 times more volatile than Hennessy Balanced Fund. It trades about -0.31 of its total potential returns per unit of risk. Hennessy Balanced Fund is currently generating about 0.09 per unit of volatility. If you would invest 1,208 in Hennessy Balanced Fund on August 26, 2024 and sell it today you would earn a total of 9.00 from holding Hennessy Balanced Fund or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Hennessy Balanced Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Hennessy Balanced |
GlaxoSmithKline PLC and Hennessy Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Hennessy Balanced
The main advantage of trading using opposite GlaxoSmithKline PLC and Hennessy Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Hennessy Balanced 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 Hennessy Balanced will offset losses from the drop in Hennessy Balanced'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 |
| Hennessy Balanced vs. Hennessy Total Return | Hennessy Balanced vs. Hennessy Nerstone Value | Hennessy Balanced vs. Hennessy Nerstone Growth | Hennessy Balanced vs. Villere Balanced Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |