Correlation Between GlaxoSmithKline PLC and Sobr Safe

Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Sobr Safe 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 Sobr Safe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GlaxoSmithKline PLC ADR and Sobr Safe, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Sobr Safe 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 Sobr Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Sobr Safe.

Diversification Opportunities for GlaxoSmithKline PLC and Sobr Safe

0.89

Correlation Coefficient

GlaxoSmithKline PLC  Sobr Safe

Very poor diversification

The 3 months correlation between GlaxoSmithKline and Sobr is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Sobr Safe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sobr Safe 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 ADR are associated (or correlated) with Sobr Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sobr Safe has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Sobr Safe go up and down completely randomly.

Pair Corralation between GlaxoSmithKline PLC and Sobr Safe

Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to generate 0.08 times more return on investment than Sobr Safe. However, GlaxoSmithKline PLC ADR is 11.96 times less risky than Sobr Safe. It trades about -0.11 of its potential returns per unit of risk. Sobr Safe is currently generating about -0.04 per unit of risk. If you would invest  4,333  in GlaxoSmithKline PLC ADR on August 26, 2024 and sell it today you would lose (937.00) from holding GlaxoSmithKline PLC ADR or give up 21.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

GlaxoSmithKline PLC ADR  vs.  Sobr Safe

GlaxoSmithKline PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlaxoSmithKline PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sobr Safe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sobr Safe has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Sobr Safe is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GlaxoSmithKline PLC and Sobr Safe

The main advantage of trading using opposite GlaxoSmithKline PLC and Sobr Safe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Sobr Safe 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 Sobr Safe will offset losses from the drop in Sobr Safe's long position.

The idea behind GlaxoSmithKline PLC ADR and Sobr Safe pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.