Correlation Between GlaxoSmithKline PLC and Otter Creek
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Otter Creek 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 Otter Creek 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 Otter Creek Longshort, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Otter Creek 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 Otter Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Otter Creek.
Diversification Opportunities for GlaxoSmithKline PLC and Otter Creek
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Otter is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Otter Creek Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Creek Longshort 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 Otter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Creek Longshort has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Otter Creek go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Otter Creek
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Otter Creek. In addition to that, GlaxoSmithKline PLC is 1.92 times more volatile than Otter Creek Longshort. It trades about 0.0 of its total potential returns per unit of risk. Otter Creek Longshort is currently generating about 0.12 per unit of volatility. If you would invest 1,228 in Otter Creek Longshort on August 26, 2024 and sell it today you would earn a total of 279.00 from holding Otter Creek Longshort or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Otter Creek Longshort
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Otter Creek Longshort |
GlaxoSmithKline PLC and Otter Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Otter Creek
The main advantage of trading using opposite GlaxoSmithKline PLC and Otter Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Otter Creek 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 Otter Creek will offset losses from the drop in Otter Creek'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 |
| Otter Creek vs. Boston Partners Global | Otter Creek vs. Asg Managed Futures | Otter Creek vs. Pimco Trends Managed | Otter Creek vs. Aqr Long Short Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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