Correlation Between GlaxoSmithKline PLC and The Hartford
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and The Hartford 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 The Hartford 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 The Hartford Total, you can compare the effects of market volatilities on GlaxoSmithKline PLC and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and The Hartford.
Diversification Opportunities for GlaxoSmithKline PLC and The Hartford
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and The is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and The Hartford Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Total 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Total has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and The Hartford go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and The Hartford
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the The Hartford. In addition to that, GlaxoSmithKline PLC is 4.23 times more volatile than The Hartford Total. It trades about -0.31 of its total potential returns per unit of risk. The Hartford Total is currently generating about 0.06 per unit of volatility. If you would invest 910.00 in The Hartford Total on August 29, 2024 and sell it today you would earn a total of 4.00 from holding The Hartford Total or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. The Hartford Total
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Hartford Total |
GlaxoSmithKline PLC and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and The Hartford
The main advantage of trading using opposite GlaxoSmithKline PLC and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford'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 |
| The Hartford vs. Allianzgi Health Sciences | The Hartford vs. Delaware Healthcare Fund | The Hartford vs. Alphacentric Lifesci Healthcare | The Hartford vs. Fidelity Advisor Health |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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