Correlation Between GlaxoSmithKline PLC and Kraft Bank
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Kraft Bank 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 Kraft Bank 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 Kraft Bank Asa, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Kraft Bank 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 Kraft Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Kraft Bank.
Diversification Opportunities for GlaxoSmithKline PLC and Kraft Bank
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlaxoSmithKline and Kraft is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Kraft Bank Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Bank Asa 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 Kraft Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Bank Asa has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Kraft Bank go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Kraft Bank
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Kraft Bank. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.02 times less risky than Kraft Bank. The stock trades about -0.23 of its potential returns per unit of risk. The Kraft Bank Asa is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 900.00 in Kraft Bank Asa on September 1, 2024 and sell it today you would lose (15.00) from holding Kraft Bank Asa or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Kraft Bank Asa
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Kraft Bank Asa |
GlaxoSmithKline PLC and Kraft Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Kraft Bank
The main advantage of trading using opposite GlaxoSmithKline PLC and Kraft Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Kraft Bank 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 Kraft Bank will offset losses from the drop in Kraft Bank'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 |
| Kraft Bank vs. Romerike Sparebank | Kraft Bank vs. Nidaros Sparebank | Kraft Bank vs. Odfjell Drilling | Kraft Bank vs. Helgeland Sparebank |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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