Correlation Between GlaxoSmithKline PLC and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Putnam Floating 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 Putnam Floating 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 Putnam Floating Rate, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Putnam Floating 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 Putnam Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Putnam Floating.
Diversification Opportunities for GlaxoSmithKline PLC and Putnam Floating
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Putnam is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate 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 Putnam Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Putnam Floating go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Putnam Floating
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Putnam Floating. In addition to that, GlaxoSmithKline PLC is 10.76 times more volatile than Putnam Floating Rate. It trades about -0.24 of its total potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.4 per unit of volatility. If you would invest 793.00 in Putnam Floating Rate on August 31, 2024 and sell it today you would earn a total of 8.00 from holding Putnam Floating Rate or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Putnam Floating Rate
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Putnam Floating Rate |
GlaxoSmithKline PLC and Putnam Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Putnam Floating
The main advantage of trading using opposite GlaxoSmithKline PLC and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Putnam Floating 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 Putnam Floating will offset losses from the drop in Putnam Floating'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 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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