Correlation Between GlaxoSmithKline PLC and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lumina Gold 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 Lumina Gold 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 Lumina Gold Corp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lumina Gold 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 Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lumina Gold.
Diversification Opportunities for GlaxoSmithKline PLC and Lumina Gold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Lumina is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina Gold 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 Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lumina Gold go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lumina Gold
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Lumina Gold. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.05 times less risky than Lumina Gold. The stock trades about -0.12 of its potential returns per unit of risk. The Lumina Gold Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Lumina Gold Corp on August 29, 2024 and sell it today you would lose (8.00) from holding Lumina Gold Corp or give up 14.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Lumina Gold Corp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lumina Gold Corp |
GlaxoSmithKline PLC and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lumina Gold
The main advantage of trading using opposite GlaxoSmithKline PLC and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lumina Gold 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 Lumina Gold will offset losses from the drop in Lumina Gold'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 |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |