Correlation Between GlaxoSmithKline PLC and Stewart Information
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Stewart Information.
Diversification Opportunities for GlaxoSmithKline PLC and Stewart Information
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Stewart is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Stewart Information go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Stewart Information
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 8.58 times less return on investment than Stewart Information. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 1.41 times less risky than Stewart Information. It trades about 0.02 of its potential returns per unit of risk. Stewart Information Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,852 in Stewart Information Services on August 31, 2024 and sell it today you would earn a total of 3,048 from holding Stewart Information Services or generate 79.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.16% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Stewart Information Services
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Stewart Information |
GlaxoSmithKline PLC and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Stewart Information
The main advantage of trading using opposite GlaxoSmithKline PLC and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information'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 |
| Stewart Information vs. Chiba Bank | Stewart Information vs. National Bank Holdings | Stewart Information vs. The Hanover Insurance | Stewart Information vs. EAGLE MATERIALS |
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 Stocks Directory module to find actively traded stocks across global markets.
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