Correlation Between GlaxoSmithKline PLC and Us Defensive
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Us Defensive 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 Us Defensive 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 Us Defensive Equity, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Us Defensive 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 Us Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Us Defensive.
Diversification Opportunities for GlaxoSmithKline PLC and Us Defensive
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and REUYX is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Us Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Defensive Equity 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 Us Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Defensive Equity has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Us Defensive go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Us Defensive
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 7.86 times less return on investment than Us Defensive. In addition to that, GlaxoSmithKline PLC is 1.65 times more volatile than Us Defensive Equity. It trades about 0.01 of its total potential returns per unit of risk. Us Defensive Equity is currently generating about 0.09 per unit of volatility. If you would invest 3,721 in Us Defensive Equity on August 29, 2024 and sell it today you would earn a total of 1,484 from holding Us Defensive Equity or generate 39.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Us Defensive Equity
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Us Defensive Equity |
GlaxoSmithKline PLC and Us Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Us Defensive
The main advantage of trading using opposite GlaxoSmithKline PLC and Us Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Us Defensive 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 Us Defensive will offset losses from the drop in Us Defensive'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 |
| Us Defensive vs. International Developed Markets | Us Defensive vs. Global Real Estate | Us Defensive vs. Global Real Estate | Us Defensive vs. Global Real Estate |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |