Correlation Between GlaxoSmithKline PLC and IMPACT Silver
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and IMPACT Silver 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 IMPACT Silver 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 IMPACT Silver Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and IMPACT Silver 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 IMPACT Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and IMPACT Silver.
Diversification Opportunities for GlaxoSmithKline PLC and IMPACT Silver
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and IMPACT is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and IMPACT Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPACT Silver Corp 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 IMPACT Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPACT Silver Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and IMPACT Silver go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and IMPACT Silver
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the IMPACT Silver. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 4.71 times less risky than IMPACT Silver. The stock trades about -0.25 of its potential returns per unit of risk. The IMPACT Silver Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23.00 in IMPACT Silver Corp on August 28, 2024 and sell it today you would earn a total of 1.00 from holding IMPACT Silver Corp or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. IMPACT Silver Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| IMPACT Silver Corp |
GlaxoSmithKline PLC and IMPACT Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and IMPACT Silver
The main advantage of trading using opposite GlaxoSmithKline PLC and IMPACT Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, IMPACT Silver 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 IMPACT Silver will offset losses from the drop in IMPACT Silver'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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