Correlation Between GlaxoSmithKline PLC and Walkabout Resources
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Walkabout Resources 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 Walkabout Resources 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 Walkabout Resources, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Walkabout Resources 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 Walkabout Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Walkabout Resources.
Diversification Opportunities for GlaxoSmithKline PLC and Walkabout Resources
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Walkabout is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Walkabout Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walkabout Resources 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 Walkabout Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walkabout Resources has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Walkabout Resources go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Walkabout Resources
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Walkabout Resources. In addition to that, GlaxoSmithKline PLC is 1.11 times more volatile than Walkabout Resources. It trades about -0.33 of its total potential returns per unit of risk. Walkabout Resources is currently generating about -0.03 per unit of volatility. If you would invest 9.60 in Walkabout Resources on August 27, 2024 and sell it today you would lose (0.10) from holding Walkabout Resources or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Walkabout Resources
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Walkabout Resources |
GlaxoSmithKline PLC and Walkabout Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Walkabout Resources
The main advantage of trading using opposite GlaxoSmithKline PLC and Walkabout Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Walkabout Resources 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 Walkabout Resources will offset losses from the drop in Walkabout Resources' 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 |
| Walkabout Resources vs. Ras Technology Holdings | Walkabout Resources vs. Autosports Group | Walkabout Resources vs. Queste Communications | Walkabout Resources vs. Zoom2u Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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