Correlation Between GlaxoSmithKline PLC and Kopernik International
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Kopernik International 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 Kopernik International 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 Kopernik International, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Kopernik International 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 Kopernik International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Kopernik International.
Diversification Opportunities for GlaxoSmithKline PLC and Kopernik International
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Kopernik is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Kopernik International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik International 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 Kopernik International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik International has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Kopernik International go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Kopernik International
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Kopernik International. In addition to that, GlaxoSmithKline PLC is 2.16 times more volatile than Kopernik International. It trades about -0.23 of its total potential returns per unit of risk. Kopernik International is currently generating about -0.12 per unit of volatility. If you would invest 1,439 in Kopernik International on August 30, 2024 and sell it today you would lose (54.00) from holding Kopernik International or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Kopernik International
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Kopernik International |
GlaxoSmithKline PLC and Kopernik International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Kopernik International
The main advantage of trading using opposite GlaxoSmithKline PLC and Kopernik International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Kopernik International 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 Kopernik International will offset losses from the drop in Kopernik International'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 |
| Kopernik International vs. Kopernik Global All Cap | Kopernik International vs. Kopernik Global All Cap | Kopernik International vs. Kopernik International Fund | Kopernik International vs. Sp 500 Equal |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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