Correlation Between GlaxoSmithKline PLC and Pyxis Tankers
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Pyxis Tankers 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 Pyxis Tankers 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 Pyxis Tankers, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Pyxis Tankers 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 Pyxis Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Pyxis Tankers.
Diversification Opportunities for GlaxoSmithKline PLC and Pyxis Tankers
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Pyxis is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Pyxis Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxis Tankers 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 Pyxis Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxis Tankers has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Pyxis Tankers go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Pyxis Tankers
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.2 times more return on investment than Pyxis Tankers. However, GlaxoSmithKline PLC ADR is 5.03 times less risky than Pyxis Tankers. It trades about -0.3 of its potential returns per unit of risk. Pyxis Tankers is currently generating about -0.16 per unit of risk. If you would invest 3,774 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would lose (341.00) from holding GlaxoSmithKline PLC ADR or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 43.48% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Pyxis Tankers
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Pyxis Tankers |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GlaxoSmithKline PLC and Pyxis Tankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Pyxis Tankers
The main advantage of trading using opposite GlaxoSmithKline PLC and Pyxis Tankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Pyxis Tankers 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 Pyxis Tankers will offset losses from the drop in Pyxis Tankers' 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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