Correlation Between GlaxoSmithKline PLC and Poseidon Nickel
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Poseidon Nickel 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 Poseidon Nickel 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 Poseidon Nickel Limited, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Poseidon Nickel 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 Poseidon Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Poseidon Nickel.
Diversification Opportunities for GlaxoSmithKline PLC and Poseidon Nickel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Poseidon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Poseidon Nickel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poseidon Nickel 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 Poseidon Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poseidon Nickel has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Poseidon Nickel go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Poseidon Nickel
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Poseidon Nickel. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 19.16 times less risky than Poseidon Nickel. The stock trades about -0.34 of its potential returns per unit of risk. The Poseidon Nickel Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.23 in Poseidon Nickel Limited on August 24, 2024 and sell it today you would earn a total of 0.17 from holding Poseidon Nickel Limited or generate 73.91% 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. Poseidon Nickel Limited
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Poseidon Nickel |
GlaxoSmithKline PLC and Poseidon Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Poseidon Nickel
The main advantage of trading using opposite GlaxoSmithKline PLC and Poseidon Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Poseidon Nickel 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 Poseidon Nickel will offset losses from the drop in Poseidon Nickel'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 |
| Poseidon Nickel vs. Norra Metals Corp | Poseidon Nickel vs. Amarc Resources | Poseidon Nickel vs. ZincX Resources Corp | Poseidon Nickel vs. Nuinsco Resources Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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