Correlation Between GlaxoSmithKline PLC and Unit
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Unit 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 Unit 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 Unit Corporation, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Unit 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 Unit. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Unit.
Diversification Opportunities for GlaxoSmithKline PLC and Unit
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between GlaxoSmithKline and Unit is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit 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 Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Unit go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Unit
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Unit. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 14.08 times less risky than Unit. The stock trades about -0.3 of its potential returns per unit of risk. The Unit Corporation is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Unit Corporation on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Unit Corporation or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Unit Corp.
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Unit |
GlaxoSmithKline PLC and Unit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Unit
The main advantage of trading using opposite GlaxoSmithKline PLC and Unit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Unit 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 Unit will offset losses from the drop in Unit'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 |
| Unit vs. Equinor ASA ADR | Unit vs. TotalEnergies SE ADR | Unit vs. Ecopetrol SA ADR | Unit vs. National Fuel Gas |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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