Correlation Between GlaxoSmithKline PLC and Public Storage
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Public Storage 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 Public Storage 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 Public Storage, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Public Storage 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 Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Public Storage.
Diversification Opportunities for GlaxoSmithKline PLC and Public Storage
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Public is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Public Storage go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Public Storage
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Public Storage. In addition to that, GlaxoSmithKline PLC is 1.02 times more volatile than Public Storage. It trades about -0.23 of its total potential returns per unit of risk. Public Storage is currently generating about 0.05 per unit of volatility. If you would invest 33,883 in Public Storage on August 31, 2024 and sell it today you would earn a total of 1,253 from holding Public Storage or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Public Storage
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Public Storage |
GlaxoSmithKline PLC and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Public Storage
The main advantage of trading using opposite GlaxoSmithKline PLC and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage'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 |
| Public Storage vs. CubeSmart | Public Storage vs. National Storage Affiliates | Public Storage vs. Prologis | Public Storage vs. STAG Industrial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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