Correlation Between GlaxoSmithKline PLC and IShares National
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and IShares National 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 IShares National 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 iShares National Muni, you can compare the effects of market volatilities on GlaxoSmithKline PLC and IShares National 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 IShares National. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and IShares National.
Diversification Opportunities for GlaxoSmithKline PLC and IShares National
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlaxoSmithKline and IShares is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and iShares National Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares National Muni 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 IShares National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares National Muni has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and IShares National go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and IShares National
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 5.02 times more return on investment than IShares National. However, GlaxoSmithKline PLC is 5.02 times more volatile than iShares National Muni. It trades about 0.02 of its potential returns per unit of risk. iShares National Muni is currently generating about 0.06 per unit of risk. If you would invest 3,273 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would earn a total of 140.00 from holding GlaxoSmithKline PLC ADR or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. iShares National Muni
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| iShares National Muni |
GlaxoSmithKline PLC and IShares National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and IShares National
The main advantage of trading using opposite GlaxoSmithKline PLC and IShares National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, IShares National 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 IShares National will offset losses from the drop in IShares National'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 Stocks Directory module to find actively traded stocks across global markets.
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