Correlation Between GlaxoSmithKline PLC and BPCEGP

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and BPCEGP 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 BPCEGP 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 BPCEGP 5748 19 JUL 33, you can compare the effects of market volatilities on GlaxoSmithKline PLC and BPCEGP 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 BPCEGP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and BPCEGP.

Diversification Opportunities for GlaxoSmithKline PLC and BPCEGP

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between GlaxoSmithKline and BPCEGP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and BPCEGP 5748 19 JUL 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPCEGP 5748 19 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 BPCEGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPCEGP 5748 19 has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and BPCEGP go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and BPCEGP

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.81 times more return on investment than BPCEGP. However, GlaxoSmithKline PLC ADR is 1.23 times less risky than BPCEGP. It trades about 0.18 of its potential returns per unit of risk. BPCEGP 5748 19 JUL 33 is currently generating about -0.31 per unit of risk. If you would invest  3,343  in GlaxoSmithKline PLC ADR on November 18, 2024 and sell it today you would earn a total of  274.00  from holding GlaxoSmithKline PLC ADR or generate 8.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy28.57%
ValuesDaily Returns

GlaxoSmithKline PLC ADR  vs.  BPCEGP 5748 19 JUL 33

 Performance 
       Timeline  
GlaxoSmithKline PLC ADR 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in GlaxoSmithKline PLC ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, GlaxoSmithKline PLC may actually be approaching a critical reversion point that can send shares even higher in March 2025.
BPCEGP 5748 19 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days BPCEGP 5748 19 JUL 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for BPCEGP 5748 19 JUL 33 investors.

GlaxoSmithKline PLC and BPCEGP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline PLC and BPCEGP

The main advantage of trading using opposite GlaxoSmithKline PLC and BPCEGP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, BPCEGP 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 BPCEGP will offset losses from the drop in BPCEGP's long position.
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The idea behind GlaxoSmithKline PLC ADR and BPCEGP 5748 19 JUL 33 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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