Correlation Between GlaxoSmithKline PLC and WALMART

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Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and WALMART 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 WALMART 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 WALMART INC 65, you can compare the effects of market volatilities on GlaxoSmithKline PLC and WALMART 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 WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and WALMART.

Diversification Opportunities for GlaxoSmithKline PLC and WALMART

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between GlaxoSmithKline and WALMART is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and WALMART INC 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC 65 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 WALMART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WALMART INC 65 has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and WALMART go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and WALMART

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the WALMART. In addition to that, GlaxoSmithKline PLC is 1.41 times more volatile than WALMART INC 65. It trades about 0.0 of its total potential returns per unit of risk. WALMART INC 65 is currently generating about 0.0 per unit of volatility. If you would invest  11,677  in WALMART INC 65 on August 27, 2024 and sell it today you would lose (206.00) from holding WALMART INC 65 or give up 1.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy96.77%
ValuesDaily Returns

GlaxoSmithKline PLC ADR  vs.  WALMART INC 65

 Performance 
       Timeline  
GlaxoSmithKline PLC ADR 

Risk-Adjusted Performance

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Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
WALMART INC 65 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WALMART INC 65 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GlaxoSmithKline PLC and WALMART Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GlaxoSmithKline PLC and WALMART

The main advantage of trading using opposite GlaxoSmithKline PLC and WALMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, WALMART 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 WALMART will offset losses from the drop in WALMART's long position.
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The idea behind GlaxoSmithKline PLC ADR and WALMART INC 65 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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