Correlation Between GlaxoSmithKline PLC and Tax-exempt Fund
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Tax-exempt Fund 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 Tax-exempt Fund 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 Tax Exempt Fund Of, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Tax-exempt Fund 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 Tax-exempt Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Tax-exempt Fund.
Diversification Opportunities for GlaxoSmithKline PLC and Tax-exempt Fund
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Tax-exempt is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Tax Exempt Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Fund 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 Tax-exempt Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Fund has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Tax-exempt Fund go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Tax-exempt Fund
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Tax-exempt Fund. In addition to that, GlaxoSmithKline PLC is 7.38 times more volatile than Tax Exempt Fund Of. It trades about -0.12 of its total potential returns per unit of risk. Tax Exempt Fund Of is currently generating about 0.14 per unit of volatility. If you would invest 1,626 in Tax Exempt Fund Of on August 29, 2024 and sell it today you would earn a total of 62.00 from holding Tax Exempt Fund Of or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Tax Exempt Fund Of
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Tax Exempt Fund |
GlaxoSmithKline PLC and Tax-exempt Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Tax-exempt Fund
The main advantage of trading using opposite GlaxoSmithKline PLC and Tax-exempt Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Tax-exempt Fund 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 Tax-exempt Fund will offset losses from the drop in Tax-exempt Fund'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 |
| Tax-exempt Fund vs. American High Income Municipal | Tax-exempt Fund vs. California Intermediate Term Tax Free | Tax-exempt Fund vs. Capital World Bond | Tax-exempt Fund vs. Tax Exempt Bond |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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