Correlation Between GlaxoSmithKline PLC and Meridian Equity
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Meridian Equity 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 Meridian Equity 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 Meridian Equity Income, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Meridian Equity 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 Meridian Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Meridian Equity.
Diversification Opportunities for GlaxoSmithKline PLC and Meridian Equity
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Meridian is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Meridian Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Equity Income 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 Meridian Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Equity Income has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Meridian Equity go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Meridian Equity
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.19 times less return on investment than Meridian Equity. In addition to that, GlaxoSmithKline PLC is 1.75 times more volatile than Meridian Equity Income. It trades about 0.01 of its total potential returns per unit of risk. Meridian Equity Income is currently generating about 0.06 per unit of volatility. If you would invest 1,239 in Meridian Equity Income on August 30, 2024 and sell it today you would earn a total of 294.00 from holding Meridian Equity Income or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Meridian Equity Income
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Meridian Equity Income |
GlaxoSmithKline PLC and Meridian Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Meridian Equity
The main advantage of trading using opposite GlaxoSmithKline PLC and Meridian Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Meridian Equity 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 Meridian Equity will offset losses from the drop in Meridian Equity'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 |
| Meridian Equity vs. Ab Impact Municipal | Meridian Equity vs. Artisan High Income | Meridian Equity vs. Blrc Sgy Mnp | Meridian Equity vs. Oklahoma Municipal Fund |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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