Correlation Between Sanofi ADR and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Sanofi ADR and GSK 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 Sanofi ADR and GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi ADR and GSK plc, you can compare the effects of market volatilities on Sanofi ADR and GSK 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 Sanofi ADR with a short position of GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi ADR and GSK Plc.
Diversification Opportunities for Sanofi ADR and GSK Plc
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sanofi and GSK is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK plc and Sanofi ADR 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 Sanofi ADR are associated (or correlated) with GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Sanofi ADR i.e., Sanofi ADR and GSK Plc go up and down completely randomly.
Pair Corralation between Sanofi ADR and GSK Plc
Considering the 90-day investment horizon Sanofi ADR is expected to generate 0.4 times more return on investment than GSK Plc. However, Sanofi ADR is 2.53 times less risky than GSK Plc. It trades about -0.47 of its potential returns per unit of risk. GSK plc is currently generating about -0.21 per unit of risk. If you would invest 5,436 in Sanofi ADR on August 28, 2024 and sell it today you would lose (601.00) from holding Sanofi ADR or give up 11.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanofi ADR vs. GSK plc
Performance |
| Timeline |
| Sanofi ADR |
| GSK plc |
Sanofi ADR and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanofi ADR and GSK Plc
The main advantage of trading using opposite Sanofi ADR and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi ADR position performs unexpectedly, GSK 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 GSK Plc will offset losses from the drop in GSK Plc's long position.| Sanofi ADR vs. AstraZeneca PLC ADR | Sanofi ADR vs. Roche Holding Ltd | Sanofi ADR vs. GlaxoSmithKline PLC ADR | Sanofi ADR vs. Merck Company |
| GSK Plc vs. Santen Pharmaceutical Co | GSK Plc vs. Ono Pharmaceutical Co | GSK Plc vs. Grifols SA ADR | GSK Plc vs. Pfizer Inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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