Correlation Between GlaxoSmithKline PLC and Prospector Capital
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Prospector Capital 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 Prospector Capital 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 Prospector Capital Equity, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Prospector Capital 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 Prospector Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Prospector Capital.
Diversification Opportunities for GlaxoSmithKline PLC and Prospector Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Prospector is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Prospector Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospector Capital Equity 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 Prospector Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospector Capital Equity has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Prospector Capital go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Prospector Capital
If you would invest 3,360 in GlaxoSmithKline PLC ADR on August 25, 2024 and sell it today you would earn a total of 10.00 from holding GlaxoSmithKline PLC ADR or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.37% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Prospector Capital Equity
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Prospector Capital Equity |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GlaxoSmithKline PLC and Prospector Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Prospector Capital
The main advantage of trading using opposite GlaxoSmithKline PLC and Prospector Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Prospector Capital 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 Prospector Capital will offset losses from the drop in Prospector Capital'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 |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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