Correlation Between Nationwide Building and GlaxoSmithKline PLC
Can any of the company-specific risk be diversified away by investing in both Nationwide Building and GlaxoSmithKline PLC 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 Nationwide Building and GlaxoSmithKline PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Building Society and GlaxoSmithKline PLC, you can compare the effects of market volatilities on Nationwide Building and GlaxoSmithKline PLC 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 Nationwide Building with a short position of GlaxoSmithKline PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and GlaxoSmithKline PLC.
Diversification Opportunities for Nationwide Building and GlaxoSmithKline PLC
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nationwide and GlaxoSmithKline is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and GlaxoSmithKline PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlaxoSmithKline PLC and Nationwide Building 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 Nationwide Building Society are associated (or correlated) with GlaxoSmithKline PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlaxoSmithKline PLC has no effect on the direction of Nationwide Building i.e., Nationwide Building and GlaxoSmithKline PLC go up and down completely randomly.
Pair Corralation between Nationwide Building and GlaxoSmithKline PLC
If you would invest 13,200 in Nationwide Building Society on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Nationwide Building Society or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Building Society vs. GlaxoSmithKline PLC
Performance |
| Timeline |
| Nationwide Building |
| GlaxoSmithKline PLC |
Nationwide Building and GlaxoSmithKline PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and GlaxoSmithKline PLC
The main advantage of trading using opposite Nationwide Building and GlaxoSmithKline PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building position performs unexpectedly, GlaxoSmithKline PLC 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 GlaxoSmithKline PLC will offset losses from the drop in GlaxoSmithKline PLC's long position.| Nationwide Building vs. Atresmedia | Nationwide Building vs. Intermediate Capital Group | Nationwide Building vs. Grand Vision Media | Nationwide Building vs. Kaufman Et Broad |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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