Correlation Between GlaxoSmithKline PLC and Maisons Du
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Maisons Du 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 Maisons Du 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 Maisons du Monde, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Maisons Du 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 Maisons Du. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Maisons Du.
Diversification Opportunities for GlaxoSmithKline PLC and Maisons Du
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GlaxoSmithKline and Maisons is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Maisons du Monde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maisons du Monde 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 Maisons Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maisons du Monde has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Maisons Du go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Maisons Du
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.5 times more return on investment than Maisons Du. However, GlaxoSmithKline PLC ADR is 1.99 times less risky than Maisons Du. It trades about -0.3 of its potential returns per unit of risk. Maisons du Monde is currently generating about -0.31 per unit of risk. If you would invest 3,774 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would lose (341.00) from holding GlaxoSmithKline PLC ADR or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Maisons du Monde
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Maisons du Monde |
GlaxoSmithKline PLC and Maisons Du Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Maisons Du
The main advantage of trading using opposite GlaxoSmithKline PLC and Maisons Du positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Maisons Du 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 Maisons Du will offset losses from the drop in Maisons Du'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 |
| Maisons Du vs. Fnac Darty SA | Maisons Du vs. Trigano SA | Maisons Du vs. Elis SA | Maisons Du vs. Derichebourg |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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