Correlation Between GlaxoSmithKline PLC and PIMCO Intermediate
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and PIMCO Intermediate 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 PIMCO Intermediate 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 PIMCO Intermediate Municipal, you can compare the effects of market volatilities on GlaxoSmithKline PLC and PIMCO Intermediate 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 PIMCO Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and PIMCO Intermediate.
Diversification Opportunities for GlaxoSmithKline PLC and PIMCO Intermediate
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and PIMCO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and PIMCO Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Intermediate 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 PIMCO Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Intermediate has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and PIMCO Intermediate go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and PIMCO Intermediate
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the PIMCO Intermediate. In addition to that, GlaxoSmithKline PLC is 4.19 times more volatile than PIMCO Intermediate Municipal. It trades about -0.3 of its total potential returns per unit of risk. PIMCO Intermediate Municipal is currently generating about 0.12 per unit of volatility. If you would invest 5,193 in PIMCO Intermediate Municipal on August 28, 2024 and sell it today you would earn a total of 42.00 from holding PIMCO Intermediate Municipal or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. PIMCO Intermediate Municipal
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| PIMCO Intermediate |
GlaxoSmithKline PLC and PIMCO Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and PIMCO Intermediate
The main advantage of trading using opposite GlaxoSmithKline PLC and PIMCO Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, PIMCO Intermediate 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 PIMCO Intermediate will offset losses from the drop in PIMCO Intermediate'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 |
| PIMCO Intermediate vs. SSGA Active Trust | PIMCO Intermediate vs. SPDR MarketAxess Investment | PIMCO Intermediate vs. SSGA Active Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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