Correlation Between GlaxoSmithKline PLC and Simmons First
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Simmons First 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 Simmons First 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 Simmons First National, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Simmons First 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 Simmons First. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Simmons First.
Diversification Opportunities for GlaxoSmithKline PLC and Simmons First
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Simmons is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Simmons First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmons First National 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 Simmons First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmons First National has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Simmons First go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Simmons First
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 8.83 times less return on investment than Simmons First. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.75 times less risky than Simmons First. It trades about 0.01 of its potential returns per unit of risk. Simmons First National is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,951 in Simmons First National on August 28, 2024 and sell it today you would earn a total of 535.00 from holding Simmons First National or generate 27.42% 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. Simmons First National
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Simmons First National |
GlaxoSmithKline PLC and Simmons First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Simmons First
The main advantage of trading using opposite GlaxoSmithKline PLC and Simmons First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Simmons First 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 Simmons First will offset losses from the drop in Simmons First'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 |
| Simmons First vs. Renasant | Simmons First vs. Sandy Spring Bancorp | Simmons First vs. Home BancShares | Simmons First vs. Southside Bancshares, |
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..
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