Correlation Between Grupo Sports and GlaxoSmithKline Plc
Can any of the company-specific risk be diversified away by investing in both Grupo Sports 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 Grupo Sports and GlaxoSmithKline Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Sports World and GlaxoSmithKline plc, you can compare the effects of market volatilities on Grupo Sports 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 Grupo Sports with a short position of GlaxoSmithKline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and GlaxoSmithKline Plc.
Diversification Opportunities for Grupo Sports and GlaxoSmithKline Plc
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grupo and GlaxoSmithKline is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and GlaxoSmithKline plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlaxoSmithKline plc and Grupo Sports 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 Grupo Sports World 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 Grupo Sports i.e., Grupo Sports and GlaxoSmithKline Plc go up and down completely randomly.
Pair Corralation between Grupo Sports and GlaxoSmithKline Plc
Assuming the 90 days trading horizon Grupo Sports World is expected to generate 0.38 times more return on investment than GlaxoSmithKline Plc. However, Grupo Sports World is 2.63 times less risky than GlaxoSmithKline Plc. It trades about 0.06 of its potential returns per unit of risk. GlaxoSmithKline plc is currently generating about -0.03 per unit of risk. If you would invest 628.00 in Grupo Sports World on September 5, 2024 and sell it today you would earn a total of 10.00 from holding Grupo Sports World or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Sports World vs. GlaxoSmithKline plc
Performance |
| Timeline |
| Grupo Sports World |
| GlaxoSmithKline plc |
Grupo Sports and GlaxoSmithKline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Sports and GlaxoSmithKline Plc
The main advantage of trading using opposite Grupo Sports and GlaxoSmithKline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports 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.| Grupo Sports vs. Axtel SAB de | Grupo Sports vs. Fomento Econmico Mexicano | Grupo Sports vs. Lloyds Banking Group | Grupo Sports vs. Apple Inc |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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