Correlation Between GlaxoSmithKline PLC and Lollands Bank
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lollands Bank 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 Lollands Bank 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 Lollands Bank, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lollands Bank 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 Lollands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lollands Bank.
Diversification Opportunities for GlaxoSmithKline PLC and Lollands Bank
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlaxoSmithKline and Lollands is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank 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 Lollands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lollands Bank has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lollands Bank go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lollands Bank
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.92 times more return on investment than Lollands Bank. However, GlaxoSmithKline PLC ADR is 1.08 times less risky than Lollands Bank. It trades about 0.02 of its potential returns per unit of risk. Lollands Bank is currently generating about 0.01 per unit of risk. If you would invest 3,486 in GlaxoSmithKline PLC ADR on January 25, 2025 and sell it today you would earn a total of 256.00 from holding GlaxoSmithKline PLC ADR or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.14% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Lollands Bank
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lollands Bank |
GlaxoSmithKline PLC and Lollands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lollands Bank
The main advantage of trading using opposite GlaxoSmithKline PLC and Lollands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lollands Bank 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 Lollands Bank will offset losses from the drop in Lollands Bank'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 |
| Lollands Bank vs. Skjern Bank AS | Lollands Bank vs. Kreditbanken AS | Lollands Bank vs. Djurslands Bank | Lollands Bank vs. Groenlandsbanken AS |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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