Correlation Between GlaxoSmithKline PLC and Lyons Bancorp
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Lyons Bancorp 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 Lyons Bancorp 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 Lyons Bancorp, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Lyons Bancorp 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 Lyons Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Lyons Bancorp.
Diversification Opportunities for GlaxoSmithKline PLC and Lyons Bancorp
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Lyons is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Lyons Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyons Bancorp 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 Lyons Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyons Bancorp has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Lyons Bancorp go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Lyons Bancorp
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Lyons Bancorp. In addition to that, GlaxoSmithKline PLC is 1.74 times more volatile than Lyons Bancorp. It trades about -0.26 of its total potential returns per unit of risk. Lyons Bancorp is currently generating about 0.11 per unit of volatility. If you would invest 3,910 in Lyons Bancorp on August 25, 2024 and sell it today you would earn a total of 165.00 from holding Lyons Bancorp or generate 4.22% 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. Lyons Bancorp
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Lyons Bancorp |
GlaxoSmithKline PLC and Lyons Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Lyons Bancorp
The main advantage of trading using opposite GlaxoSmithKline PLC and Lyons Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Lyons Bancorp 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 Lyons Bancorp will offset losses from the drop in Lyons Bancorp'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 |
| Lyons Bancorp vs. FS Bancorp | Lyons Bancorp vs. Eastern Michigan Financial | Lyons Bancorp vs. Grand River Commerce | Lyons Bancorp vs. Bank of Botetourt |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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