Correlation Between GlaxoSmithKline PLC and Income Stock
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Income Stock 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 Income Stock 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 Income Stock Fund, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Income Stock 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 Income Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Income Stock.
Diversification Opportunities for GlaxoSmithKline PLC and Income Stock
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Income is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Income Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Stock 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 Income Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Stock has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Income Stock go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Income Stock
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Income Stock. In addition to that, GlaxoSmithKline PLC is 2.22 times more volatile than Income Stock Fund. It trades about -0.25 of its total potential returns per unit of risk. Income Stock Fund is currently generating about 0.14 per unit of volatility. If you would invest 2,106 in Income Stock Fund on August 29, 2024 and sell it today you would earn a total of 90.00 from holding Income Stock Fund or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Income Stock Fund
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Income Stock |
GlaxoSmithKline PLC and Income Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Income Stock
The main advantage of trading using opposite GlaxoSmithKline PLC and Income Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Income Stock 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 Income Stock will offset losses from the drop in Income Stock'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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