Correlation Between GlaxoSmithKline PLC and Mfs Variable
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Mfs Variable 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 Mfs Variable 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 Mfs Variable Insurance, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Mfs Variable 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 Mfs Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Mfs Variable.
Diversification Opportunities for GlaxoSmithKline PLC and Mfs Variable
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GlaxoSmithKline and Mfs is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Mfs Variable Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Variable Insurance 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 Mfs Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Variable Insurance has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Mfs Variable go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Mfs Variable
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Mfs Variable. In addition to that, GlaxoSmithKline PLC is 1.47 times more volatile than Mfs Variable Insurance. It trades about -0.3 of its total potential returns per unit of risk. Mfs Variable Insurance is currently generating about 0.18 per unit of volatility. If you would invest 3,945 in Mfs Variable Insurance on August 30, 2024 and sell it today you would earn a total of 151.00 from holding Mfs Variable Insurance or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Mfs Variable Insurance
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Mfs Variable Insurance |
GlaxoSmithKline PLC and Mfs Variable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Mfs Variable
The main advantage of trading using opposite GlaxoSmithKline PLC and Mfs Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Mfs Variable 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 Mfs Variable will offset losses from the drop in Mfs Variable'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 |
| Mfs Variable vs. Realty Income | Mfs Variable vs. Dynex Capital | Mfs Variable vs. First Industrial Realty | Mfs Variable vs. Healthcare Realty Trust |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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