Correlation Between GlaxoSmithKline PLC and National Bank
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on GlaxoSmithKline PLC and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and National Bank.
Diversification Opportunities for GlaxoSmithKline PLC and National Bank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and National is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and National Bank go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and National Bank
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.56 times more return on investment than National Bank. However, GlaxoSmithKline PLC ADR is 1.79 times less risky than National Bank. It trades about -0.23 of its potential returns per unit of risk. National Bank of is currently generating about -0.24 per unit of risk. If you would invest 3,634 in GlaxoSmithKline PLC ADR on September 1, 2024 and sell it today you would lose (221.00) from holding GlaxoSmithKline PLC ADR or give up 6.08% 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. National Bank of
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| National Bank |
GlaxoSmithKline PLC and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and National Bank
The main advantage of trading using opposite GlaxoSmithKline PLC and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. Piraeus Bank SA | National Bank vs. Turkiye Garanti Bankasi | National Bank vs. Delhi Bank Corp | National Bank vs. Uwharrie Capital Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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