Correlation Between GlaxoSmithKline PLC and International Equity
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and International Equity 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 International Equity 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 International Equity Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and International Equity.
Diversification Opportunities for GlaxoSmithKline PLC and International Equity
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and International is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and International Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and International Equity go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and International Equity
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.02 times less return on investment than International Equity. In addition to that, GlaxoSmithKline PLC is 1.61 times more volatile than International Equity Fund. It trades about 0.0 of its total potential returns per unit of risk. International Equity Fund is currently generating about 0.02 per unit of volatility. If you would invest 924.00 in International Equity Fund on August 29, 2024 and sell it today you would earn a total of 58.00 from holding International Equity Fund or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. International Equity Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| International Equity |
GlaxoSmithKline PLC and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and International Equity
The main advantage of trading using opposite GlaxoSmithKline PLC and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity'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 |
| International Equity vs. James Balanced Golden | International Equity vs. Fidelity Advisor Gold | International Equity vs. Franklin Gold Precious | International Equity vs. Europac Gold 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Transaction History View history of all your transactions and understand their impact on performance |