Correlation Between GlaxoSmithKline PLC and Pax Global
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Pax Global 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 Pax Global 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 Pax Global Environmental, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Pax Global 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 Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Pax Global.
Diversification Opportunities for GlaxoSmithKline PLC and Pax Global
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GlaxoSmithKline and Pax is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental 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 Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Pax Global go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Pax Global
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Pax Global. In addition to that, GlaxoSmithKline PLC is 1.73 times more volatile than Pax Global Environmental. It trades about -0.23 of its total potential returns per unit of risk. Pax Global Environmental is currently generating about 0.15 per unit of volatility. If you would invest 2,429 in Pax Global Environmental on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Pax Global Environmental or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Pax Global Environmental
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Pax Global Environmental |
GlaxoSmithKline PLC and Pax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Pax Global
The main advantage of trading using opposite GlaxoSmithKline PLC and Pax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Pax Global 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 Pax Global will offset losses from the drop in Pax Global'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 |
| Pax Global vs. Pax Ellevate Global | Pax Global vs. Pax Small Cap | Pax Global vs. Green Century Balanced | Pax Global vs. Portfolio 21 Global |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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