Correlation Between GlaxoSmithKline PLC and Leatt Corp
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Leatt Corp 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 Leatt Corp 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 Leatt Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Leatt Corp 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 Leatt Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Leatt Corp.
Diversification Opportunities for GlaxoSmithKline PLC and Leatt Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Leatt is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Leatt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatt Corp 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 Leatt Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatt Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Leatt Corp go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Leatt Corp
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Leatt Corp. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 3.28 times less risky than Leatt Corp. The stock trades about -0.3 of its potential returns per unit of risk. The Leatt Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 790.00 in Leatt Corp on August 28, 2024 and sell it today you would lose (39.00) from holding Leatt Corp or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Leatt Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Leatt Corp |
GlaxoSmithKline PLC and Leatt Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Leatt Corp
The main advantage of trading using opposite GlaxoSmithKline PLC and Leatt Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Leatt Corp 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 Leatt Corp will offset losses from the drop in Leatt Corp'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 |
| Leatt Corp vs. Escalade Incorporated | Leatt Corp vs. American Outdoor Brands | Leatt Corp vs. OneSpaWorld Holdings | Leatt Corp vs. JAKKS Pacific |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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