Correlation Between GlaxoSmithKline PLC and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Emerald Growth 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 Emerald Growth 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 Emerald Growth Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Emerald Growth 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 Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Emerald Growth.
Diversification Opportunities for GlaxoSmithKline PLC and Emerald Growth
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Emerald is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth 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 Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Emerald Growth go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Emerald Growth
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Emerald Growth. In addition to that, GlaxoSmithKline PLC is 1.09 times more volatile than Emerald Growth Fund. It trades about -0.12 of its total potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.1 per unit of volatility. If you would invest 2,283 in Emerald Growth Fund on August 29, 2024 and sell it today you would earn a total of 424.00 from holding Emerald Growth Fund or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Emerald Growth Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Emerald Growth |
GlaxoSmithKline PLC and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Emerald Growth
The main advantage of trading using opposite GlaxoSmithKline PLC and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth'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 |
| Emerald Growth vs. Putnam Equity Income | Emerald Growth vs. Putnam Growth Opportunities | Emerald Growth vs. HUMANA INC | Emerald Growth vs. Aquagold International |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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