Correlation Between GlaxoSmithKline PLC and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Payden Emerging 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 Payden Emerging 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 Payden Emerging Markets, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Payden Emerging 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 Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Payden Emerging.
Diversification Opportunities for GlaxoSmithKline PLC and Payden Emerging
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Payden is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets 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 Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Payden Emerging go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Payden Emerging
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.99 times less return on investment than Payden Emerging. In addition to that, GlaxoSmithKline PLC is 7.49 times more volatile than Payden Emerging Markets. It trades about 0.01 of its total potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.18 per unit of volatility. If you would invest 756.00 in Payden Emerging Markets on August 25, 2024 and sell it today you would earn a total of 127.00 from holding Payden Emerging Markets or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Payden Emerging Markets
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Payden Emerging Markets |
GlaxoSmithKline PLC and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Payden Emerging
The main advantage of trading using opposite GlaxoSmithKline PLC and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Payden Emerging 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 Payden Emerging will offset losses from the drop in Payden Emerging'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 |
| Payden Emerging vs. Payden Porate Bond | Payden Emerging vs. Payden Absolute Return | Payden Emerging vs. Payden Absolute Return | Payden Emerging vs. Payden Emerging Markets |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |