Correlation Between GlaxoSmithKline PLC and White Pearl
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and White Pearl 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 White Pearl 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 White Pearl Technology, you can compare the effects of market volatilities on GlaxoSmithKline PLC and White Pearl 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 White Pearl. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and White Pearl.
Diversification Opportunities for GlaxoSmithKline PLC and White Pearl
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and White is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl Technology 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 White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and White Pearl go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and White Pearl
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 11.19 times less return on investment than White Pearl. But when comparing it to its historical volatility, GlaxoSmithKline PLC ADR is 3.68 times less risky than White Pearl. It trades about 0.01 of its potential returns per unit of risk. White Pearl Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 496.00 in White Pearl Technology on August 25, 2024 and sell it today you would earn a total of 130.00 from holding White Pearl Technology or generate 26.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.98% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. White Pearl Technology
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| White Pearl Technology |
GlaxoSmithKline PLC and White Pearl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and White Pearl
The main advantage of trading using opposite GlaxoSmithKline PLC and White Pearl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, White Pearl 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 White Pearl will offset losses from the drop in White Pearl'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 |
| White Pearl vs. AstraZeneca PLC | White Pearl vs. Investor AB ser | White Pearl vs. Investor AB ser | White Pearl vs. Atlas Copco AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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