Correlation Between GlaxoSmithKline PLC and Satori Resources
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Satori Resources 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 Satori Resources 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 Satori Resources, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Satori Resources 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 Satori Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Satori Resources.
Diversification Opportunities for GlaxoSmithKline PLC and Satori Resources
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Satori is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Satori Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satori Resources 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 Satori Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satori Resources has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Satori Resources go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Satori Resources
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.34 times more return on investment than Satori Resources. However, GlaxoSmithKline PLC ADR is 2.93 times less risky than Satori Resources. It trades about -0.23 of its potential returns per unit of risk. Satori Resources is currently generating about -0.13 per unit of risk. If you would invest 4,042 in GlaxoSmithKline PLC ADR on August 30, 2024 and sell it today you would lose (609.00) from holding GlaxoSmithKline PLC ADR or give up 15.07% 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. Satori Resources
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Satori Resources |
GlaxoSmithKline PLC and Satori Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Satori Resources
The main advantage of trading using opposite GlaxoSmithKline PLC and Satori Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Satori Resources 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 Satori Resources will offset losses from the drop in Satori Resources' 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 |
| Satori Resources vs. Vertiv Holdings Co | Satori Resources vs. Nasdaq Inc | Satori Resources vs. McDonalds | Satori Resources vs. Walmart |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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