Correlation Between GlaxoSmithKline PLC and Pimco High
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Pimco High 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 Pimco High 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 Pimco High Yield, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Pimco High 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 Pimco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Pimco High.
Diversification Opportunities for GlaxoSmithKline PLC and Pimco High
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Pimco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Pimco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco High Yield 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 Pimco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco High Yield has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Pimco High go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Pimco High
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.3 times less return on investment than Pimco High. In addition to that, GlaxoSmithKline PLC is 4.73 times more volatile than Pimco High Yield. It trades about 0.01 of its total potential returns per unit of risk. Pimco High Yield is currently generating about 0.07 per unit of volatility. If you would invest 775.00 in Pimco High Yield on August 26, 2024 and sell it today you would earn a total of 82.00 from holding Pimco High Yield or generate 10.58% 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. Pimco High Yield
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Pimco High Yield |
GlaxoSmithKline PLC and Pimco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Pimco High
The main advantage of trading using opposite GlaxoSmithKline PLC and Pimco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Pimco High 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 Pimco High will offset losses from the drop in Pimco High'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 |
| Pimco High vs. Pimco Rae Worldwide | Pimco High vs. Pimco Rae Worldwide | Pimco High vs. Pimco Rae Worldwide | Pimco High vs. Pimco Rae Worldwide |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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