Correlation Between GlaxoSmithKline PLC and Mairs Power
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Mairs Power 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 Mairs Power 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 Mairs Power Balanced, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Mairs Power 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 Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Mairs Power.
Diversification Opportunities for GlaxoSmithKline PLC and Mairs Power
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Mairs is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Mairs Power Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Balanced 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 Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Balanced has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Mairs Power go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Mairs Power
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Mairs Power. In addition to that, GlaxoSmithKline PLC is 2.31 times more volatile than Mairs Power Balanced. It trades about -0.27 of its total potential returns per unit of risk. Mairs Power Balanced is currently generating about 0.21 per unit of volatility. If you would invest 11,085 in Mairs Power Balanced on August 29, 2024 and sell it today you would earn a total of 323.00 from holding Mairs Power Balanced or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Mairs Power Balanced
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Mairs Power Balanced |
GlaxoSmithKline PLC and Mairs Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Mairs Power
The main advantage of trading using opposite GlaxoSmithKline PLC and Mairs Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Mairs Power 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 Mairs Power will offset losses from the drop in Mairs Power'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 |
| Mairs Power vs. American Balanced Fund | Mairs Power vs. American Balanced Fund | Mairs Power vs. HUMANA INC | Mairs Power vs. Aquagold International |
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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