Correlation Between GlaxoSmithKline PLC and Liberty All
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Liberty All 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 Liberty All 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 Liberty All Star, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Liberty All 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 Liberty All. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Liberty All.
Diversification Opportunities for GlaxoSmithKline PLC and Liberty All
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Liberty is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Liberty All Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty All Star 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 Liberty All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty All Star has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Liberty All go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Liberty All
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 4.22 times less return on investment than Liberty All. In addition to that, GlaxoSmithKline PLC is 1.4 times more volatile than Liberty All Star. It trades about 0.02 of its total potential returns per unit of risk. Liberty All Star is currently generating about 0.1 per unit of volatility. If you would invest 525.00 in Liberty All Star on August 27, 2024 and sell it today you would earn a total of 204.00 from holding Liberty All Star or generate 38.86% 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. Liberty All Star
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Liberty All Star |
GlaxoSmithKline PLC and Liberty All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Liberty All
The main advantage of trading using opposite GlaxoSmithKline PLC and Liberty All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Liberty All 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 Liberty All will offset losses from the drop in Liberty All'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 |
| Liberty All vs. Adams Diversified Equity | Liberty All vs. BlackRock Science and | Liberty All vs. Virtus Allianzgi Artificial | Liberty All vs. Royce Value Closed |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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