Correlation Between GlaxoSmithKline PLC and Marinus Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Marinus Pharmaceuticals 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 Marinus Pharmaceuticals 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 Marinus Pharmaceuticals, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Marinus Pharmaceuticals 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 Marinus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Marinus Pharmaceuticals.
Diversification Opportunities for GlaxoSmithKline PLC and Marinus Pharmaceuticals
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Marinus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Marinus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marinus Pharmaceuticals 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 Marinus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marinus Pharmaceuticals has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Marinus Pharmaceuticals go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Marinus Pharmaceuticals
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.1 times more return on investment than Marinus Pharmaceuticals. However, GlaxoSmithKline PLC ADR is 9.54 times less risky than Marinus Pharmaceuticals. It trades about -0.23 of its potential returns per unit of risk. Marinus Pharmaceuticals is currently generating about -0.1 per unit of risk. If you would invest 4,042 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would lose (609.00) from holding GlaxoSmithKline PLC ADR or give up 15.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Marinus Pharmaceuticals
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Marinus Pharmaceuticals |
GlaxoSmithKline PLC and Marinus Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Marinus Pharmaceuticals
The main advantage of trading using opposite GlaxoSmithKline PLC and Marinus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Marinus Pharmaceuticals 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 Marinus Pharmaceuticals will offset losses from the drop in Marinus Pharmaceuticals' 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 |
| Marinus Pharmaceuticals vs. Akero Therapeutics | Marinus Pharmaceuticals vs. Terns Pharmaceuticals | Marinus Pharmaceuticals vs. Madrigal Pharmaceuticals | Marinus Pharmaceuticals vs. Inozyme Pharma |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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