Correlation Between GlaxoSmithKline PLC and Micron Technology
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Micron Technology.
Diversification Opportunities for GlaxoSmithKline PLC and Micron Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Micron is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Micron Technology go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Micron Technology
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.62 times more return on investment than Micron Technology. However, GlaxoSmithKline PLC ADR is 1.62 times less risky than Micron Technology. It trades about 0.18 of its potential returns per unit of risk. Micron Technology is currently generating about -0.06 per unit of risk. If you would invest 3,343 in GlaxoSmithKline PLC ADR on November 18, 2024 and sell it today you would earn a total of 274.00 from holding GlaxoSmithKline PLC ADR or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Micron Technology
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Micron Technology |
GlaxoSmithKline PLC and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Micron Technology
The main advantage of trading using opposite GlaxoSmithKline PLC and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology'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 |
| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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