Correlation Between GlaxoSmithKline PLC and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sierra Tactical 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 Sierra Tactical 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 Sierra Tactical Risk, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sierra Tactical.
Diversification Opportunities for GlaxoSmithKline PLC and Sierra Tactical
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Sierra is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sierra Tactical Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Risk 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Risk has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sierra Tactical go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sierra Tactical
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 1.67 times less return on investment than Sierra Tactical. In addition to that, GlaxoSmithKline PLC is 3.21 times more volatile than Sierra Tactical Risk. It trades about 0.01 of its total potential returns per unit of risk. Sierra Tactical Risk is currently generating about 0.07 per unit of volatility. If you would invest 2,144 in Sierra Tactical Risk on August 26, 2024 and sell it today you would earn a total of 323.00 from holding Sierra Tactical Risk or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sierra Tactical Risk
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sierra Tactical Risk |
GlaxoSmithKline PLC and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sierra Tactical
The main advantage of trading using opposite GlaxoSmithKline PLC and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical'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 |
| Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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