Correlation Between GlaxoSmithKline PLC and SHP ETF
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and SHP ETF 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 SHP ETF 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 SHP ETF Trust, you can compare the effects of market volatilities on GlaxoSmithKline PLC and SHP ETF 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 SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and SHP ETF.
Diversification Opportunities for GlaxoSmithKline PLC and SHP ETF
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and SHP is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and SHP ETF go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and SHP ETF
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 3.48 times less return on investment than SHP ETF. In addition to that, GlaxoSmithKline PLC is 2.22 times more volatile than SHP ETF Trust. It trades about 0.01 of its total potential returns per unit of risk. SHP ETF Trust is currently generating about 0.11 per unit of volatility. If you would invest 4,228 in SHP ETF Trust on August 26, 2024 and sell it today you would earn a total of 968.00 from holding SHP ETF Trust or generate 22.89% 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. SHP ETF Trust
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| SHP ETF Trust |
GlaxoSmithKline PLC and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and SHP ETF
The main advantage of trading using opposite GlaxoSmithKline PLC and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, SHP ETF 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 SHP ETF will offset losses from the drop in SHP ETF'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 |
| SHP ETF vs. iShares Trust | SHP ETF vs. Simplify Volatility Premium | SHP ETF vs. Tidal Trust II | SHP ETF vs. SHP ETF Trust |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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