Correlation Between GlaxoSmithKline PLC and Rems International
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Rems International 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 Rems International 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 Rems International Real, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Rems International 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 Rems International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Rems International.
Diversification Opportunities for GlaxoSmithKline PLC and Rems International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Rems is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Rems International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rems International Real 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 Rems International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rems International Real has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Rems International go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Rems International
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 1.5 times more return on investment than Rems International. However, GlaxoSmithKline PLC is 1.5 times more volatile than Rems International Real. It trades about 0.01 of its potential returns per unit of risk. Rems International Real is currently generating about 0.02 per unit of risk. If you would invest 3,265 in GlaxoSmithKline PLC ADR on August 26, 2024 and sell it today you would earn a total of 105.00 from holding GlaxoSmithKline PLC ADR or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Rems International Real
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Rems International Real |
GlaxoSmithKline PLC and Rems International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Rems International
The main advantage of trading using opposite GlaxoSmithKline PLC and Rems International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Rems International 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 Rems International will offset losses from the drop in Rems International'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 |
| Rems International vs. Third Avenue Value | Rems International vs. Third Avenue Small Cap | Rems International vs. Alpine Realty Income | Rems International vs. The Fairholme Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |