Correlation Between GlaxoSmithKline PLC and Sit Small
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sit Small 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 Sit Small 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 Sit Small Cap, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sit Small 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 Sit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sit Small.
Diversification Opportunities for GlaxoSmithKline PLC and Sit Small
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Sit is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Small Cap 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 Sit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Small Cap has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sit Small go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sit Small
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sit Small. In addition to that, GlaxoSmithKline PLC is 1.02 times more volatile than Sit Small Cap. It trades about -0.28 of its total potential returns per unit of risk. Sit Small Cap is currently generating about 0.19 per unit of volatility. If you would invest 1,761 in Sit Small Cap on August 26, 2024 and sell it today you would earn a total of 102.00 from holding Sit Small Cap or generate 5.79% 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. Sit Small Cap
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sit Small Cap |
GlaxoSmithKline PLC and Sit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sit Small
The main advantage of trading using opposite GlaxoSmithKline PLC and Sit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sit Small 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 Sit Small will offset losses from the drop in Sit Small'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 |
| Sit Small vs. Quantitative U S | Sit Small vs. Alternative Asset Allocation | Sit Small vs. Siit Large Cap | Sit Small vs. Pace Large Growth |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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