Correlation Between GlaxoSmithKline PLC and Nationwide Destination
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Nationwide Destination 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 Nationwide Destination 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 Nationwide Destination 2055, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Nationwide Destination 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 Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Nationwide Destination.
Diversification Opportunities for GlaxoSmithKline PLC and Nationwide Destination
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Nationwide is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Nationwide Destination 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination 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 Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Nationwide Destination go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Nationwide Destination
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Nationwide Destination. In addition to that, GlaxoSmithKline PLC is 2.04 times more volatile than Nationwide Destination 2055. It trades about -0.3 of its total potential returns per unit of risk. Nationwide Destination 2055 is currently generating about 0.16 per unit of volatility. If you would invest 1,523 in Nationwide Destination 2055 on August 30, 2024 and sell it today you would earn a total of 36.00 from holding Nationwide Destination 2055 or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Nationwide Destination 2055
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Nationwide Destination |
GlaxoSmithKline PLC and Nationwide Destination Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Nationwide Destination
The main advantage of trading using opposite GlaxoSmithKline PLC and Nationwide Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Nationwide Destination 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 Nationwide Destination will offset losses from the drop in Nationwide Destination'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 |
| Nationwide Destination vs. Nationwide Investor Destinations | Nationwide Destination vs. Nationwide Investor Destinations | Nationwide Destination vs. Nationwide Investor Destinations |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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