Correlation Between GlaxoSmithKline PLC and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Hennessy Cornerstone 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 Cornerstone 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 Nerstone Value, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Hennessy Cornerstone 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 Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Hennessy Cornerstone.
Diversification Opportunities for GlaxoSmithKline PLC and Hennessy Cornerstone
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Hennessy is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Hennessy Nerstone Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Value 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 Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Value has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Hennessy Cornerstone
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 9.37 times less return on investment than Hennessy Cornerstone. In addition to that, GlaxoSmithKline PLC is 2.04 times more volatile than Hennessy Nerstone Value. It trades about 0.01 of its total potential returns per unit of risk. Hennessy Nerstone Value is currently generating about 0.12 per unit of volatility. If you would invest 1,774 in Hennessy Nerstone Value on August 29, 2024 and sell it today you would earn a total of 455.00 from holding Hennessy Nerstone Value or generate 25.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Hennessy Nerstone Value
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Hennessy Nerstone Value |
GlaxoSmithKline PLC and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Hennessy Cornerstone
The main advantage of trading using opposite GlaxoSmithKline PLC and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Hennessy Cornerstone 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 Cornerstone will offset losses from the drop in Hennessy Cornerstone'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 Cornerstone vs. Hennessy Nerstone Growth | Hennessy Cornerstone vs. Hennessy Total Return | Hennessy Cornerstone vs. Hennessy Balanced Fund | Hennessy Cornerstone vs. Hennessy Nerstone Large |
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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