Correlation Between GlaxoSmithKline PLC and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lord Abbett 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 Lord Abbett 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 Lord Abbett Growth, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lord Abbett.
Diversification Opportunities for GlaxoSmithKline PLC and Lord Abbett
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Lord is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Growth has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lord Abbett go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lord Abbett
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 6.31 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.06 times less risky than Lord Abbett. It trades about 0.02 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,458 in Lord Abbett Growth on August 31, 2024 and sell it today you would earn a total of 2,284 from holding Lord Abbett Growth or generate 92.92% 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. Lord Abbett Growth
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lord Abbett Growth |
GlaxoSmithKline PLC and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lord Abbett
The main advantage of trading using opposite GlaxoSmithKline PLC and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett'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 |
| Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Lord Abbett New | Lord Abbett vs. Lord Abbett National |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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