Correlation Between GlaxoSmithKline PLC and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sterling Capital.
Diversification Opportunities for GlaxoSmithKline PLC and Sterling Capital
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Sterling is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sterling Capital go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Sterling Capital
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Sterling Capital. In addition to that, GlaxoSmithKline PLC is 1.26 times more volatile than Sterling Capital Stratton. It trades about -0.3 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.2 per unit of volatility. If you would invest 6,484 in Sterling Capital Stratton on August 30, 2024 and sell it today you would earn a total of 317.00 from holding Sterling Capital Stratton or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Sterling Capital Stratton
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Sterling Capital Stratton |
GlaxoSmithKline PLC and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Sterling Capital
The main advantage of trading using opposite GlaxoSmithKline PLC and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Baird Strategic Municipal | Sterling Capital vs. The Hartford Municipal | Sterling Capital vs. Nebraska Municipal Fund | Sterling Capital vs. Counterpoint Tactical Municipal |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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