Correlation Between GLAXOSMITHKLINE PLC and Veeco Instrument

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Can any of the company-specific risk be diversified away by investing in both GLAXOSMITHKLINE PLC and Veeco Instrument 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 Veeco Instrument into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLAXOSMITHKLINE PLC ORD and Veeco Instrument, you can compare the effects of market volatilities on GLAXOSMITHKLINE PLC and Veeco Instrument 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 Veeco Instrument. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLAXOSMITHKLINE PLC and Veeco Instrument.

Diversification Opportunities for GLAXOSMITHKLINE PLC and Veeco Instrument

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between GLAXOSMITHKLINE and Veeco is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GLAXOSMITHKLINE PLC ORD 25P and Veeco Instrument in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instrument 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 ORD are associated (or correlated) with Veeco Instrument. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instrument has no effect on the direction of GLAXOSMITHKLINE PLC i.e., GLAXOSMITHKLINE PLC and Veeco Instrument go up and down completely randomly.

Pair Corralation between GLAXOSMITHKLINE PLC and Veeco Instrument

Assuming the 90 days horizon GLAXOSMITHKLINE PLC ORD is expected to under-perform the Veeco Instrument. But the stock apears to be less risky and, when comparing its historical volatility, GLAXOSMITHKLINE PLC ORD is 1.55 times less risky than Veeco Instrument. The stock trades about -0.32 of its potential returns per unit of risk. The Veeco Instrument is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,793  in Veeco Instrument on May 13, 2022 and sell it today you would earn a total of  392.00  from holding Veeco Instrument or generate 21.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

GLAXOSMITHKLINE PLC ORD 25P  vs.  Veeco Instrument

 Performance (%) 
       Timeline  
GLAXOSMITHKLINE PLC ORD 
GLAXOSMITHKLINE Performance
0 of 100
Over the last 90 days GLAXOSMITHKLINE PLC ORD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

GLAXOSMITHKLINE Price Channel

Veeco Instrument 
Veeco Performance
0 of 100
Over the last 90 days Veeco Instrument has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Veeco Instrument is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Veeco Price Channel

GLAXOSMITHKLINE PLC and Veeco Instrument Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GLAXOSMITHKLINE PLC and Veeco Instrument

The main advantage of trading using opposite GLAXOSMITHKLINE PLC and Veeco Instrument positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLAXOSMITHKLINE PLC position performs unexpectedly, Veeco Instrument 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 Veeco Instrument will offset losses from the drop in Veeco Instrument's long position.
The idea behind GLAXOSMITHKLINE PLC ORD and Veeco Instrument 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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