Correlation Between GlaxoSmithKline PLC and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Kinetics Small 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 Kinetics Small 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 Kinetics Small Cap, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Kinetics Small 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 Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Kinetics Small.
Diversification Opportunities for GlaxoSmithKline PLC and Kinetics Small
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Kinetics is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap 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 Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Kinetics Small go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Kinetics Small
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Kinetics Small. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.22 times less risky than Kinetics Small. The stock trades about 0.0 of its potential returns per unit of risk. The Kinetics Small Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 11,171 in Kinetics Small Cap on August 29, 2024 and sell it today you would earn a total of 11,326 from holding Kinetics Small Cap or generate 101.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Kinetics Small Cap
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Kinetics Small Cap |
GlaxoSmithKline PLC and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Kinetics Small
The main advantage of trading using opposite GlaxoSmithKline PLC and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Kinetics Small 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 Kinetics Small will offset losses from the drop in Kinetics Small'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 |
| Kinetics Small vs. Oil Gas Ultrasector | Kinetics Small vs. Clearbridge Energy Mlp | Kinetics Small vs. Dreyfus Natural Resources | Kinetics Small vs. Franklin Natural Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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