Correlation Between GlaxoSmithKline PLC and Lakeland Financial
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lakeland Financial 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 Lakeland Financial 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 Lakeland Financial, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lakeland Financial 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 Lakeland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lakeland Financial.
Diversification Opportunities for GlaxoSmithKline PLC and Lakeland Financial
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Lakeland is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Financial 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 Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lakeland Financial go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lakeland Financial
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Lakeland Financial. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.67 times less risky than Lakeland Financial. The stock trades about -0.25 of its potential returns per unit of risk. The Lakeland Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,716 in Lakeland Financial on August 28, 2024 and sell it today you would earn a total of 869.00 from holding Lakeland Financial or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Lakeland Financial
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lakeland Financial |
GlaxoSmithKline PLC and Lakeland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lakeland Financial
The main advantage of trading using opposite GlaxoSmithKline PLC and Lakeland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lakeland Financial 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 Lakeland Financial will offset losses from the drop in Lakeland Financial'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 |
| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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