Correlation Between GlaxoSmithKline PLC and Victory Sycamore
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Victory Sycamore 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 Victory Sycamore 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 Victory Sycamore Small, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Victory Sycamore 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 Victory Sycamore. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Victory Sycamore.
Diversification Opportunities for GlaxoSmithKline PLC and Victory Sycamore
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and Victory is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Victory Sycamore Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Sycamore Small 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 Victory Sycamore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Sycamore Small has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Victory Sycamore go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Victory Sycamore
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Victory Sycamore. But the stock apears to be less risky and, when comparing its historical volatility, GlaxoSmithKline PLC ADR is 1.14 times less risky than Victory Sycamore. The stock trades about -0.32 of its potential returns per unit of risk. The Victory Sycamore Small is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 5,022 in Victory Sycamore Small on August 25, 2024 and sell it today you would earn a total of 448.00 from holding Victory Sycamore Small or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Victory Sycamore Small
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Victory Sycamore Small |
GlaxoSmithKline PLC and Victory Sycamore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Victory Sycamore
The main advantage of trading using opposite GlaxoSmithKline PLC and Victory Sycamore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Victory Sycamore 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 Victory Sycamore will offset losses from the drop in Victory Sycamore'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 |
| Victory Sycamore vs. Vanguard Small Cap Index | Victory Sycamore vs. Nationwide Small Cap | Victory Sycamore vs. Victory Integrity Small Cap | Victory Sycamore vs. Touchstone Small Cap |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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