Correlation Between GlaxoSmithKline PLC and SPORT LISBOA
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and SPORT LISBOA 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 SPORT LISBOA 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 SPORT LISBOA E, you can compare the effects of market volatilities on GlaxoSmithKline PLC and SPORT LISBOA 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 SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and SPORT LISBOA.
Diversification Opportunities for GlaxoSmithKline PLC and SPORT LISBOA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and SPORT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E 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 SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and SPORT LISBOA go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and SPORT LISBOA
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.57 times more return on investment than SPORT LISBOA. However, GlaxoSmithKline PLC ADR is 1.75 times less risky than SPORT LISBOA. It trades about 0.01 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.0 per unit of risk. If you would invest 3,410 in GlaxoSmithKline PLC ADR on August 28, 2024 and sell it today you would lose (8.00) from holding GlaxoSmithKline PLC ADR or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. SPORT LISBOA E
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| SPORT LISBOA E |
GlaxoSmithKline PLC and SPORT LISBOA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and SPORT LISBOA
The main advantage of trading using opposite GlaxoSmithKline PLC and SPORT LISBOA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, SPORT LISBOA 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 SPORT LISBOA will offset losses from the drop in SPORT LISBOA'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 |
| SPORT LISBOA vs. The Walt Disney | SPORT LISBOA vs. Superior Plus Corp | SPORT LISBOA vs. NMI Holdings | SPORT LISBOA vs. Origin Agritech |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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