Correlation Between GlaxoSmithKline Plc and United Airlines
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline Plc and United Airlines 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 United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlaxoSmithKline plc and United Airlines Holdings, you can compare the effects of market volatilities on GlaxoSmithKline Plc and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline Plc and United Airlines.
Diversification Opportunities for GlaxoSmithKline Plc and United Airlines
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlaxoSmithKline and United is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline plc and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of GlaxoSmithKline Plc i.e., GlaxoSmithKline Plc and United Airlines go up and down completely randomly.
Pair Corralation between GlaxoSmithKline Plc and United Airlines
Assuming the 90 days trading horizon GlaxoSmithKline plc is expected to under-perform the United Airlines. In addition to that, GlaxoSmithKline Plc is 1.4 times more volatile than United Airlines Holdings. It trades about -0.03 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.43 per unit of volatility. If you would invest 160,849 in United Airlines Holdings on September 4, 2024 and sell it today you would earn a total of 39,651 from holding United Airlines Holdings or generate 24.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlaxoSmithKline plc vs. United Airlines Holdings
Performance |
| Timeline |
| GlaxoSmithKline plc |
| United Airlines Holdings |
GlaxoSmithKline Plc and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline Plc and United Airlines
The main advantage of trading using opposite GlaxoSmithKline Plc and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline Plc position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| GlaxoSmithKline Plc vs. United Airlines Holdings | GlaxoSmithKline Plc vs. DXC Technology | GlaxoSmithKline Plc vs. Genworth Financial | GlaxoSmithKline Plc vs. Grupo Sports World |
| United Airlines vs. Cognizant Technology Solutions | United Airlines vs. Applied Materials | United Airlines vs. DXC Technology | United Airlines 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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