Correlation Between GlaxoSmithKline PLC and Wasatch Emerging
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Wasatch Emerging 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 Wasatch Emerging 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 Wasatch Emerging Markets, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Wasatch Emerging 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 Wasatch Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Wasatch Emerging.
Diversification Opportunities for GlaxoSmithKline PLC and Wasatch Emerging
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between GlaxoSmithKline and Wasatch is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Wasatch Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Emerging Markets 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 Wasatch Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Emerging Markets has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Wasatch Emerging go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Wasatch Emerging
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Wasatch Emerging. In addition to that, GlaxoSmithKline PLC is 1.56 times more volatile than Wasatch Emerging Markets. It trades about -0.23 of its total potential returns per unit of risk. Wasatch Emerging Markets is currently generating about -0.19 per unit of volatility. If you would invest 1,780 in Wasatch Emerging Markets on September 1, 2024 and sell it today you would lose (61.00) from holding Wasatch Emerging Markets or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Wasatch Emerging Markets
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Wasatch Emerging Markets |
GlaxoSmithKline PLC and Wasatch Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Wasatch Emerging
The main advantage of trading using opposite GlaxoSmithKline PLC and Wasatch Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Wasatch Emerging 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 Wasatch Emerging will offset losses from the drop in Wasatch Emerging'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 |
| Wasatch Emerging vs. Wasatch Emerging India | Wasatch Emerging vs. Wasatch Emerging Markets | Wasatch Emerging vs. Wasatch Frontier Emerging | Wasatch Emerging vs. Wasatch Global Opportunities |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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