Correlation Between GlaxoSmithKline PLC and BetaShares Managed
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and BetaShares Managed 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 BetaShares Managed 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 BetaShares Managed Risk, you can compare the effects of market volatilities on GlaxoSmithKline PLC and BetaShares Managed 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 BetaShares Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and BetaShares Managed.
Diversification Opportunities for GlaxoSmithKline PLC and BetaShares Managed
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and BetaShares is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and BetaShares Managed Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Managed Risk 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 BetaShares Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Managed Risk has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and BetaShares Managed go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and BetaShares Managed
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 4.34 times less return on investment than BetaShares Managed. In addition to that, GlaxoSmithKline PLC is 1.95 times more volatile than BetaShares Managed Risk. It trades about 0.01 of its total potential returns per unit of risk. BetaShares Managed Risk is currently generating about 0.1 per unit of volatility. If you would invest 1,438 in BetaShares Managed Risk on August 26, 2024 and sell it today you would earn a total of 565.00 from holding BetaShares Managed Risk or generate 39.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. BetaShares Managed Risk
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| BetaShares Managed Risk |
GlaxoSmithKline PLC and BetaShares Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and BetaShares Managed
The main advantage of trading using opposite GlaxoSmithKline PLC and BetaShares Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, BetaShares Managed 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 BetaShares Managed will offset losses from the drop in BetaShares Managed'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 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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