Correlation Between GlaxoSmithKline PLC and Sp 500
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sp 500 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 Sp 500 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 Sp 500 Equal, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sp 500.
Diversification Opportunities for GlaxoSmithKline PLC and Sp 500
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and INDEX is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sp 500 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Equal 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Equal has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sp 500 go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sp 500
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sp 500. In addition to that, GlaxoSmithKline PLC is 1.62 times more volatile than Sp 500 Equal. It trades about -0.3 of its total potential returns per unit of risk. Sp 500 Equal is currently generating about 0.18 per unit of volatility. If you would invest 5,559 in Sp 500 Equal on August 29, 2024 and sell it today you would earn a total of 193.00 from holding Sp 500 Equal or generate 3.47% 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. Sp 500 Equal
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sp 500 Equal |
GlaxoSmithKline PLC and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sp 500
The main advantage of trading using opposite GlaxoSmithKline PLC and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500'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 |
| Sp 500 vs. Europac Gold Fund | Sp 500 vs. Fidelity Advisor Gold | Sp 500 vs. James Balanced Golden | Sp 500 vs. Global 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Commodity Directory Find actively traded commodities issued by global exchanges |