Correlation Between GlaxoSmithKline PLC and Knife River
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Knife River 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 Knife River 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 Knife River, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Knife River.
Diversification Opportunities for GlaxoSmithKline PLC and Knife River
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Knife is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Knife River go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Knife River
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Knife River. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.33 times less risky than Knife River. The stock trades about -0.3 of its potential returns per unit of risk. The Knife River is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,641 in Knife River on August 30, 2024 and sell it today you would earn a total of 634.00 from holding Knife River or generate 6.58% 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. Knife River
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Knife River |
GlaxoSmithKline PLC and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Knife River
The main advantage of trading using opposite GlaxoSmithKline PLC and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River'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 |
| Knife River vs. Philip Morris International | Knife River vs. PepsiCo | Knife River vs. Compania Cervecerias Unidas | Knife River vs. The Cheesecake Factory |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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