Correlation Between GlaxoSmithKline PLC and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Kelt Exploration 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 Kelt Exploration 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 Kelt Exploration, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Kelt Exploration 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 Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Kelt Exploration.
Diversification Opportunities for GlaxoSmithKline PLC and Kelt Exploration
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Kelt is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration 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 Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Kelt Exploration go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Kelt Exploration
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Kelt Exploration. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.39 times less risky than Kelt Exploration. The stock trades about -0.11 of its potential returns per unit of risk. The Kelt Exploration is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 595.00 in Kelt Exploration on August 25, 2024 and sell it today you would earn a total of 98.00 from holding Kelt Exploration or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Kelt Exploration
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Kelt Exploration |
GlaxoSmithKline PLC and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Kelt Exploration
The main advantage of trading using opposite GlaxoSmithKline PLC and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration'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 |
| Kelt Exploration vs. NuVista Energy | Kelt Exploration vs. Advantage Oil Gas | Kelt Exploration vs. Birchcliff Energy | Kelt Exploration vs. Cardinal Energy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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