Correlation Between GlaxoSmithKline PLC and Mustang Bio
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Mustang Bio 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 Mustang Bio 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 Mustang Bio, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Mustang Bio 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 Mustang Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Mustang Bio.
Diversification Opportunities for GlaxoSmithKline PLC and Mustang Bio
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Mustang is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio 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 Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Mustang Bio go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Mustang Bio
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.12 times more return on investment than Mustang Bio. However, GlaxoSmithKline PLC ADR is 8.34 times less risky than Mustang Bio. It trades about 0.13 of its potential returns per unit of risk. Mustang Bio is currently generating about -0.28 per unit of risk. If you would invest 3,395 in GlaxoSmithKline PLC ADR on November 3, 2024 and sell it today you would earn a total of 132.00 from holding GlaxoSmithKline PLC ADR or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Mustang Bio
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Mustang Bio |
GlaxoSmithKline PLC and Mustang Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Mustang Bio
The main advantage of trading using opposite GlaxoSmithKline PLC and Mustang Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Mustang Bio 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 Mustang Bio will offset losses from the drop in Mustang Bio'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 |
| Mustang Bio vs. Checkpoint Therapeutics | Mustang Bio vs. Reviva Pharmaceuticals Holdings | Mustang Bio vs. Fortress Biotech Pref | Mustang Bio vs. Kodiak Sciences |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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