Correlation Between GlaxoSmithKline PLC and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Stampede Drilling 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 Stampede Drilling 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 Stampede Drilling, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Stampede Drilling 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 Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Stampede Drilling.
Diversification Opportunities for GlaxoSmithKline PLC and Stampede Drilling
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Stampede is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Stampede Drilling go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Stampede Drilling
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.37 times more return on investment than Stampede Drilling. However, GlaxoSmithKline PLC ADR is 2.67 times less risky than Stampede Drilling. It trades about 0.01 of its potential returns per unit of risk. Stampede Drilling is currently generating about -0.01 per unit of risk. If you would invest 3,326 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would earn a total of 107.00 from holding GlaxoSmithKline PLC ADR or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Stampede Drilling
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Stampede Drilling |
GlaxoSmithKline PLC and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Stampede Drilling
The main advantage of trading using opposite GlaxoSmithKline PLC and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Stampede Drilling 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 Stampede Drilling will offset losses from the drop in Stampede Drilling'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 |
| Stampede Drilling vs. Canadian Natural Resources | Stampede Drilling vs. Suncor Energy | Stampede Drilling vs. iShares Canadian HYBrid | Stampede Drilling vs. Altagas Cum Red |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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