Correlation Between GlaxoSmithKline PLC and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Nicola Mining 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 Nicola Mining 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 Nicola Mining, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Nicola Mining 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 Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Nicola Mining.
Diversification Opportunities for GlaxoSmithKline PLC and Nicola Mining
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Nicola is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola Mining 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 Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Nicola Mining go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Nicola Mining
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.25 times more return on investment than Nicola Mining. However, GlaxoSmithKline PLC ADR is 4.07 times less risky than Nicola Mining. It trades about -0.23 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.06 per unit of risk. If you would invest 3,659 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would lose (226.00) from holding GlaxoSmithKline PLC ADR or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Nicola Mining
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Nicola Mining |
GlaxoSmithKline PLC and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Nicola Mining
The main advantage of trading using opposite GlaxoSmithKline PLC and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Nicola Mining 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 Nicola Mining will offset losses from the drop in Nicola Mining'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 |
| Nicola Mining vs. Liontown Resources Limited | Nicola Mining vs. ATT Inc | Nicola Mining vs. Merck Company | Nicola Mining vs. Walt Disney |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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