Correlation Between GlaxoSmithKline PLC and Western Bulk
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Western Bulk 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 Bulk 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 Bulk Chartering, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Western Bulk 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 Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Western Bulk.
Diversification Opportunities for GlaxoSmithKline PLC and Western Bulk
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GlaxoSmithKline and Western is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Western Bulk Chartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Bulk Chartering 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 Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Bulk Chartering has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Western Bulk go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Western Bulk
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.49 times more return on investment than Western Bulk. However, GlaxoSmithKline PLC ADR is 2.04 times less risky than Western Bulk. It trades about 0.01 of its potential returns per unit of risk. Western Bulk Chartering is currently generating about -0.08 per unit of risk. If you would invest 3,403 in GlaxoSmithKline PLC ADR on August 31, 2024 and sell it today you would earn a total of 30.00 from holding GlaxoSmithKline PLC ADR or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.49% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Western Bulk Chartering
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Western Bulk Chartering |
GlaxoSmithKline PLC and Western Bulk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Western Bulk
The main advantage of trading using opposite GlaxoSmithKline PLC and Western Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Western Bulk 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 Bulk will offset losses from the drop in Western Bulk'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 Bulk vs. Havila Shipping ASA | Western Bulk vs. Shelf Drilling | Western Bulk vs. Solstad Offsho | Western Bulk vs. Eidesvik Offshore ASA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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