Correlation Between GlaxoSmithKline PLC and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Stelar Metals 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 Stelar Metals 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 Stelar Metals, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Stelar Metals 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Stelar Metals.
Diversification Opportunities for GlaxoSmithKline PLC and Stelar Metals
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlaxoSmithKline and Stelar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Stelar Metals go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Stelar Metals
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.24 times more return on investment than Stelar Metals. However, GlaxoSmithKline PLC ADR is 4.2 times less risky than Stelar Metals. It trades about 0.02 of its potential returns per unit of risk. Stelar Metals is currently generating about 0.0 per unit of risk. If you would invest 3,229 in GlaxoSmithKline PLC ADR on August 28, 2024 and sell it today you would earn a total of 186.00 from holding GlaxoSmithKline PLC ADR or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.17% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Stelar Metals
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Stelar Metals |
GlaxoSmithKline PLC and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Stelar Metals
The main advantage of trading using opposite GlaxoSmithKline PLC and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' 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 |
| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
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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