Correlation Between GlaxoSmithKline PLC and Thales SA
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Thales SA 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 Thales SA 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 Thales SA, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Thales SA 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Thales SA.
Diversification Opportunities for GlaxoSmithKline PLC and Thales SA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Thales is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Thales SA go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Thales SA
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Thales SA. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.62 times less risky than Thales SA. The stock trades about -0.23 of its potential returns per unit of risk. The Thales SA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 15,105 in Thales SA on August 31, 2024 and sell it today you would lose (800.00) from holding Thales SA or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Thales SA
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Thales SA |
GlaxoSmithKline PLC and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Thales SA
The main advantage of trading using opposite GlaxoSmithKline PLC and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA'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 |
| Thales SA vs. Derichebourg | Thales SA vs. Casino Guichard Perrachon | Thales SA vs. Etablissements Maurel et | Thales SA vs. Manitou BF SA |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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