Correlation Between GlaxoSmithKline PLC and Exxon
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Exxon 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 Exxon 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 EXXON MOBIL CDR, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Exxon.
Diversification Opportunities for GlaxoSmithKline PLC and Exxon
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GlaxoSmithKline and Exxon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Exxon go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Exxon
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Exxon. In addition to that, GlaxoSmithKline PLC is 1.23 times more volatile than EXXON MOBIL CDR. It trades about -0.3 of its total potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.11 per unit of volatility. If you would invest 2,227 in EXXON MOBIL CDR on August 25, 2024 and sell it today you would earn a total of 56.00 from holding EXXON MOBIL CDR or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. EXXON MOBIL CDR
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| EXXON MOBIL CDR |
GlaxoSmithKline PLC and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Exxon
The main advantage of trading using opposite GlaxoSmithKline PLC and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon'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 |
| Exxon vs. Trican Well Service | Exxon vs. Ensign Energy Services | Exxon vs. Calfrac Well Services | Exxon vs. Birchcliff Energy |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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