Correlation Between GlaxoSmithKline PLC and Peab AB
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Peab AB 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 Peab AB 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 Peab AB, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Peab AB 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 Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Peab AB.
Diversification Opportunities for GlaxoSmithKline PLC and Peab AB
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Peab is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab AB 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Peab AB go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Peab AB
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Peab AB. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.04 times less risky than Peab AB. The stock trades about -0.23 of its potential returns per unit of risk. The Peab AB is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 8,110 in Peab AB on September 1, 2024 and sell it today you would lose (95.00) from holding Peab AB or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Peab AB
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Peab AB |
GlaxoSmithKline PLC and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Peab AB
The main advantage of trading using opposite GlaxoSmithKline PLC and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Peab AB 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 Peab AB will offset losses from the drop in Peab AB'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 |
| Peab AB vs. Lundin Mining | Peab AB vs. Media and Games | Peab AB vs. Lohilo Foods AB | Peab AB vs. JLT Mobile Computers |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |