Correlation Between GlaxoSmithKline PLC and Lexaria Bioscience
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lexaria Bioscience 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 Lexaria Bioscience 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 Lexaria Bioscience Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lexaria Bioscience 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 Lexaria Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lexaria Bioscience.
Diversification Opportunities for GlaxoSmithKline PLC and Lexaria Bioscience
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Lexaria is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lexaria Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexaria Bioscience 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 Lexaria Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexaria Bioscience Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lexaria Bioscience go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lexaria Bioscience
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.4 times more return on investment than Lexaria Bioscience. However, GlaxoSmithKline PLC ADR is 2.52 times less risky than Lexaria Bioscience. It trades about 0.19 of its potential returns per unit of risk. Lexaria Bioscience Corp is currently generating about -0.29 per unit of risk. If you would invest 3,347 in GlaxoSmithKline PLC ADR on November 4, 2024 and sell it today you would earn a total of 180.00 from holding GlaxoSmithKline PLC ADR or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Lexaria Bioscience Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lexaria Bioscience Corp |
GlaxoSmithKline PLC and Lexaria Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lexaria Bioscience
The main advantage of trading using opposite GlaxoSmithKline PLC and Lexaria Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lexaria Bioscience 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 Lexaria Bioscience will offset losses from the drop in Lexaria Bioscience'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 |
| Lexaria Bioscience vs. Revelation Biosciences | Lexaria Bioscience vs. Zura Bio Limited | Lexaria Bioscience vs. Phio Pharmaceuticals Corp | Lexaria Bioscience vs. ZyVersa Therapeutics |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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