Correlation Between GlaxoSmithKline PLC and Lands End
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lands End 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 Lands End 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 Lands End, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lands End 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 Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lands End.
Diversification Opportunities for GlaxoSmithKline PLC and Lands End
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Lands is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lands End go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lands End
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Lands End. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.79 times less risky than Lands End. The stock trades about -0.3 of its potential returns per unit of risk. The Lands End is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,672 in Lands End on August 28, 2024 and sell it today you would lose (51.00) from holding Lands End or give up 3.05% 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. Lands End
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lands End |
GlaxoSmithKline PLC and Lands End Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lands End
The main advantage of trading using opposite GlaxoSmithKline PLC and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End'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 |
| Lands End vs. Tillys Inc | Lands End vs. Zumiez Inc | Lands End vs. Citi Trends | Lands End vs. Cato Corporation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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