Correlation Between GlaxoSmithKline PLC and Xtrackers
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Xtrackers 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 Xtrackers 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 Xtrackers SP 500, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Xtrackers 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 Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Xtrackers.
Diversification Opportunities for GlaxoSmithKline PLC and Xtrackers
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Xtrackers is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Xtrackers go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Xtrackers
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 6.75 times less return on investment than Xtrackers. In addition to that, GlaxoSmithKline PLC is 1.49 times more volatile than Xtrackers SP 500. It trades about 0.01 of its total potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.11 per unit of volatility. If you would invest 3,456 in Xtrackers SP 500 on August 30, 2024 and sell it today you would earn a total of 2,018 from holding Xtrackers SP 500 or generate 58.39% 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. Xtrackers SP 500
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Xtrackers SP 500 |
GlaxoSmithKline PLC and Xtrackers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Xtrackers
The main advantage of trading using opposite GlaxoSmithKline PLC and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Xtrackers 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 Xtrackers will offset losses from the drop in Xtrackers' 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 |
| Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers vs. iShares MSCI USA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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