Correlation Between GlaxoSmithKline PLC and Payden Core
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Payden Core 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 Core 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 Core Bond, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Payden Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Payden Core.
Diversification Opportunities for GlaxoSmithKline PLC and Payden Core
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Payden is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Payden Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Core Bond 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Core Bond has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Payden Core go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Payden Core
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Payden Core. In addition to that, GlaxoSmithKline PLC is 4.07 times more volatile than Payden Core Bond. It trades about -0.04 of its total potential returns per unit of risk. Payden Core Bond is currently generating about 0.05 per unit of volatility. If you would invest 895.00 in Payden Core Bond on August 29, 2024 and sell it today you would earn a total of 29.00 from holding Payden Core Bond or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Payden Core Bond
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Payden Core Bond |
GlaxoSmithKline PLC and Payden Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Payden Core
The main advantage of trading using opposite GlaxoSmithKline PLC and Payden Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Payden Core 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 Core will offset losses from the drop in Payden Core'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 Core vs. Blrc Sgy Mnp | Payden Core vs. Vanguard Emerging Markets | Payden Core vs. Federated Short Intermediate Duration | Payden Core vs. Multisector Bond Sma |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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