Correlation Between GlaxoSmithKline PLC and Mfs Global
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Mfs Global 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 Mfs Global 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 Mfs Global Real, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Mfs Global 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 Mfs Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Mfs Global.
Diversification Opportunities for GlaxoSmithKline PLC and Mfs Global
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Mfs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Mfs Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Global Real 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 Mfs Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Global Real has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Mfs Global go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Mfs Global
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Mfs Global. In addition to that, GlaxoSmithKline PLC is 1.67 times more volatile than Mfs Global Real. It trades about -0.27 of its total potential returns per unit of risk. Mfs Global Real is currently generating about 0.02 per unit of volatility. If you would invest 1,784 in Mfs Global Real on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Mfs Global Real or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Mfs Global Real
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Mfs Global Real |
GlaxoSmithKline PLC and Mfs Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Mfs Global
The main advantage of trading using opposite GlaxoSmithKline PLC and Mfs Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Mfs Global 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 Mfs Global will offset losses from the drop in Mfs Global'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 |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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