Correlation Between GlaxoSmithKline PLC and Orange Juice
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Orange Juice 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 Orange Juice 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 Orange Juice, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Orange Juice 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 Orange Juice. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Orange Juice.
Diversification Opportunities for GlaxoSmithKline PLC and Orange Juice
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Orange is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Orange Juice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange Juice 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 Orange Juice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange Juice has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Orange Juice go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Orange Juice
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 24.07 times less return on investment than Orange Juice. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 2.01 times less risky than Orange Juice. It trades about 0.01 of its potential returns per unit of risk. Orange Juice is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 21,850 in Orange Juice on August 28, 2024 and sell it today you would earn a total of 29,150 from holding Orange Juice or generate 133.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.83% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Orange Juice
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Orange Juice |
GlaxoSmithKline PLC and Orange Juice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Orange Juice
The main advantage of trading using opposite GlaxoSmithKline PLC and Orange Juice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Orange Juice 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 Orange Juice will offset losses from the drop in Orange Juice'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 |
| Orange Juice vs. Wheat Futures | Orange Juice vs. Feeder Cattle Futures | Orange Juice vs. Micro Silver Futures | Orange Juice vs. 30 Day Fed |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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