Correlation Between GlaxoSmithKline PLC and Western Alliance
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Western Alliance 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 Western Alliance 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 Western Alliance Bancorporation, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Western Alliance 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 Western Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Western Alliance.
Diversification Opportunities for GlaxoSmithKline PLC and Western Alliance
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and Western is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Western Alliance Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alliance Ban 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 Western Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alliance Ban has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Western Alliance go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Western Alliance
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Western Alliance. In addition to that, GlaxoSmithKline PLC is 1.11 times more volatile than Western Alliance Bancorporation. It trades about -0.31 of its total potential returns per unit of risk. Western Alliance Bancorporation is currently generating about 0.19 per unit of volatility. If you would invest 2,039 in Western Alliance Bancorporation on August 26, 2024 and sell it today you would earn a total of 105.00 from holding Western Alliance Bancorporation or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Western Alliance Bancorp.
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Western Alliance Ban |
GlaxoSmithKline PLC and Western Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Western Alliance
The main advantage of trading using opposite GlaxoSmithKline PLC and Western Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Western Alliance 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 Western Alliance will offset losses from the drop in Western Alliance'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 |
| Western Alliance vs. Morgan Stanley | Western Alliance vs. KeyCorp | Western Alliance vs. KeyCorp | Western Alliance vs. KeyCorp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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