Correlation Between GlaxoSmithKline PLC and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and ITALIAN WINE 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 ITALIAN WINE 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 ITALIAN WINE BRANDS, you can compare the effects of market volatilities on GlaxoSmithKline PLC and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and ITALIAN WINE.
Diversification Opportunities for GlaxoSmithKline PLC and ITALIAN WINE
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and ITALIAN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and ITALIAN WINE go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and ITALIAN WINE
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.58 times less return on investment than ITALIAN WINE. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.43 times less risky than ITALIAN WINE. It trades about 0.01 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,101 in ITALIAN WINE BRANDS on September 1, 2024 and sell it today you would earn a total of 109.00 from holding ITALIAN WINE BRANDS or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.89% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| ITALIAN WINE BRANDS |
GlaxoSmithKline PLC and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and ITALIAN WINE
The main advantage of trading using opposite GlaxoSmithKline PLC and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE'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 |
| ITALIAN WINE vs. RETAIL FOOD GROUP | ITALIAN WINE vs. Pick n Pay | ITALIAN WINE vs. The Trade Desk | ITALIAN WINE vs. FLOW TRADERS LTD |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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