Correlation Between GlaxoSmithKline PLC and 11880 Solutions
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and 11880 Solutions 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 11880 Solutions 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 11880 Solutions AG, you can compare the effects of market volatilities on GlaxoSmithKline PLC and 11880 Solutions 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 11880 Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and 11880 Solutions.
Diversification Opportunities for GlaxoSmithKline PLC and 11880 Solutions
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and 11880 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and 11880 Solutions AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 11880 Solutions AG 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 11880 Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 11880 Solutions AG has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and 11880 Solutions go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and 11880 Solutions
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.61 times more return on investment than 11880 Solutions. However, GlaxoSmithKline PLC ADR is 1.64 times less risky than 11880 Solutions. It trades about -0.23 of its potential returns per unit of risk. 11880 Solutions AG is currently generating about -0.39 per unit of risk. If you would invest 3,659 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would lose (226.00) from holding GlaxoSmithKline PLC ADR or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. 11880 Solutions AG
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| 11880 Solutions AG |
GlaxoSmithKline PLC and 11880 Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and 11880 Solutions
The main advantage of trading using opposite GlaxoSmithKline PLC and 11880 Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, 11880 Solutions 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 11880 Solutions will offset losses from the drop in 11880 Solutions' 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 |
| 11880 Solutions vs. QUEEN S ROAD | 11880 Solutions vs. Lendlease Group | 11880 Solutions vs. EVS Broadcast Equipment | 11880 Solutions vs. WILLIS LEASE FIN |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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