Correlation Between GlaxoSmithKline Plc and Pfizer
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline Plc and Pfizer 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 Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline plc and Pfizer Inc, you can compare the effects of market volatilities on GlaxoSmithKline Plc and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline Plc and Pfizer.
Diversification Opportunities for GlaxoSmithKline Plc and Pfizer
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GlaxoSmithKline and Pfizer is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline plc and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of GlaxoSmithKline Plc i.e., GlaxoSmithKline Plc and Pfizer go up and down completely randomly.
Pair Corralation between GlaxoSmithKline Plc and Pfizer
Assuming the 90 days trading horizon GlaxoSmithKline plc is expected to generate 0.87 times more return on investment than Pfizer. However, GlaxoSmithKline plc is 1.15 times less risky than Pfizer. It trades about 0.03 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.06 per unit of risk. If you would invest 61,044 in GlaxoSmithKline plc on September 3, 2024 and sell it today you would earn a total of 12,896 from holding GlaxoSmithKline plc or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
GlaxoSmithKline plc vs. Pfizer Inc
Performance |
| Timeline |
| GlaxoSmithKline plc |
| Pfizer Inc |
GlaxoSmithKline Plc and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline Plc and Pfizer
The main advantage of trading using opposite GlaxoSmithKline Plc and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline Plc position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.| GlaxoSmithKline Plc vs. Lloyds Banking Group | GlaxoSmithKline Plc vs. Southern Copper | GlaxoSmithKline Plc vs. Genworth Financial | GlaxoSmithKline Plc vs. Costco Wholesale |
| Pfizer vs. FibraHotel | Pfizer vs. Hoteles City Express | Pfizer vs. CVS Health | Pfizer vs. United States Steel |
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.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |