Correlation Between GlaxoSmithKline PLC and Serco
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Serco 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 Serco 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 Serco Group, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Serco 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 Serco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Serco.
Diversification Opportunities for GlaxoSmithKline PLC and Serco
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Serco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Serco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serco Group 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 Serco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serco Group has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Serco go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Serco
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.61 times more return on investment than Serco. However, GlaxoSmithKline PLC ADR is 1.64 times less risky than Serco. It trades about -0.3 of its potential returns per unit of risk. Serco Group is currently generating about -0.23 per unit of risk. If you would invest 3,774 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would lose (341.00) from holding GlaxoSmithKline PLC ADR or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Serco Group
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Serco Group |
GlaxoSmithKline PLC and Serco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Serco
The main advantage of trading using opposite GlaxoSmithKline PLC and Serco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Serco 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 Serco will offset losses from the drop in Serco'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 |
| Serco vs. Spotify Technology SA | Serco vs. X FAB Silicon Foundries | Serco vs. Auction Technology Group | Serco vs. Microchip Technology |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges |