Correlation Between GlaxoSmithKline PLC and Taiga Building
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Taiga Building 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 Taiga Building 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 Taiga Building Products, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Taiga Building 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 Taiga Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Taiga Building.
Diversification Opportunities for GlaxoSmithKline PLC and Taiga Building
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between GlaxoSmithKline and Taiga is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Taiga Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiga Building Products 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 Taiga Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiga Building Products has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Taiga Building go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Taiga Building
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Taiga Building. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.35 times less risky than Taiga Building. The stock trades about -0.23 of its potential returns per unit of risk. The Taiga Building Products is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 381.00 in Taiga Building Products on September 1, 2024 and sell it today you would lose (6.00) from holding Taiga Building Products or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Taiga Building Products
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Taiga Building Products |
GlaxoSmithKline PLC and Taiga Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Taiga Building
The main advantage of trading using opposite GlaxoSmithKline PLC and Taiga Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Taiga Building 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 Taiga Building will offset losses from the drop in Taiga Building'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 |
| Taiga Building vs. Goodfellow | Taiga Building vs. Conifex Timber | Taiga Building vs. Supremex | Taiga Building vs. Western Forest Products |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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