Correlation Between GlaxoSmithKline PLC and Prairie Operating
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Prairie Operating 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 Prairie Operating 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 Prairie Operating Co, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Prairie Operating 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 Prairie Operating. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Prairie Operating.
Diversification Opportunities for GlaxoSmithKline PLC and Prairie Operating
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlaxoSmithKline and Prairie is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Prairie Operating Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Operating 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 Prairie Operating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Operating has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Prairie Operating go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Prairie Operating
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Prairie Operating. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 2.71 times less risky than Prairie Operating. The stock trades about -0.23 of its potential returns per unit of risk. The Prairie Operating Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 846.00 in Prairie Operating Co on August 31, 2024 and sell it today you would earn a total of 16.00 from holding Prairie Operating Co or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Prairie Operating Co
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Prairie Operating |
GlaxoSmithKline PLC and Prairie Operating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Prairie Operating
The main advantage of trading using opposite GlaxoSmithKline PLC and Prairie Operating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Prairie Operating 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 Prairie Operating will offset losses from the drop in Prairie Operating'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 |
| Prairie Operating vs. Raymond James Financial | Prairie Operating vs. The Charles Schwab | Prairie Operating vs. The Charles Schwab | Prairie Operating vs. Futu Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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