Correlation Between GlaxoSmithKline PLC and Toshiba
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Toshiba 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 Toshiba 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 Toshiba, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Toshiba 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 Toshiba. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Toshiba.
Diversification Opportunities for GlaxoSmithKline PLC and Toshiba
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GlaxoSmithKline and Toshiba is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Toshiba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba 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 Toshiba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Toshiba go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Toshiba
If you would invest 3,414 in GlaxoSmithKline PLC ADR on August 25, 2024 and sell it today you would lose (44.00) from holding GlaxoSmithKline PLC ADR or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Toshiba
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Toshiba |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GlaxoSmithKline PLC and Toshiba Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Toshiba
The main advantage of trading using opposite GlaxoSmithKline PLC and Toshiba positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Toshiba 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 Toshiba will offset losses from the drop in Toshiba'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 |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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