Correlation Between GlaxoSmithKline PLC and Sporting Clube
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sporting Clube 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 Sporting Clube 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 Sporting Clube de, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sporting Clube 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 Sporting Clube. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sporting Clube.
Diversification Opportunities for GlaxoSmithKline PLC and Sporting Clube
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Sporting is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sporting Clube de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporting Clube de 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 Sporting Clube. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporting Clube de has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sporting Clube go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sporting Clube
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sporting Clube. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 16.18 times less risky than Sporting Clube. The stock trades about -0.23 of its potential returns per unit of risk. The Sporting Clube de is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 120.00 in Sporting Clube de on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Sporting Clube de or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sporting Clube de
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sporting Clube de |
GlaxoSmithKline PLC and Sporting Clube Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sporting Clube
The main advantage of trading using opposite GlaxoSmithKline PLC and Sporting Clube positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sporting Clube 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 Sporting Clube will offset losses from the drop in Sporting Clube'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 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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