Correlation Between GlaxoSmithKline PLC and Xtrackers Low
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Xtrackers Low 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 Xtrackers Low 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 Xtrackers Low Beta, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Xtrackers Low 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 Xtrackers Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Xtrackers Low.
Diversification Opportunities for GlaxoSmithKline PLC and Xtrackers Low
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between GlaxoSmithKline and Xtrackers is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Xtrackers Low Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Low Beta 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 Xtrackers Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Low Beta has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Xtrackers Low go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Xtrackers Low
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Xtrackers Low. In addition to that, GlaxoSmithKline PLC is 6.63 times more volatile than Xtrackers Low Beta. It trades about -0.3 of its total potential returns per unit of risk. Xtrackers Low Beta is currently generating about 0.12 per unit of volatility. If you would invest 4,652 in Xtrackers Low Beta on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Xtrackers Low Beta or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Xtrackers Low Beta
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Xtrackers Low Beta |
GlaxoSmithKline PLC and Xtrackers Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Xtrackers Low
The main advantage of trading using opposite GlaxoSmithKline PLC and Xtrackers Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Xtrackers Low 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 Xtrackers Low will offset losses from the drop in Xtrackers Low'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 |
| Xtrackers Low vs. Xtrackers High Beta | Xtrackers Low vs. Xtrackers Short Duration | Xtrackers Low vs. Goldman Sachs Access | Xtrackers Low vs. FlexShares High Yield |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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