Correlation Between GlaxoSmithKline PLC and Urban Gro
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Urban Gro 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 Urban Gro 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 Urban Gro, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Urban Gro 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 Urban Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Urban Gro.
Diversification Opportunities for GlaxoSmithKline PLC and Urban Gro
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Urban is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Urban Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Gro 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 Urban Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Gro has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Urban Gro go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Urban Gro
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 2.57 times less return on investment than Urban Gro. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 4.94 times less risky than Urban Gro. It trades about 0.02 of its potential returns per unit of risk. Urban Gro is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Urban Gro on August 31, 2024 and sell it today you would lose (139.00) from holding Urban Gro or give up 47.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Urban Gro
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Urban Gro |
GlaxoSmithKline PLC and Urban Gro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Urban Gro
The main advantage of trading using opposite GlaxoSmithKline PLC and Urban Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Urban Gro 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 Urban Gro will offset losses from the drop in Urban Gro'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 |
| Urban Gro vs. CEA Industries | Urban Gro vs. Titan International | Urban Gro vs. Volvo AB ADR | Urban Gro vs. Gencor Industries |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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