Correlation Between GlaxoSmithKline PLC and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and WPG Holdings 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 WPG Holdings 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 WPG Holdings, you can compare the effects of market volatilities on GlaxoSmithKline PLC and WPG Holdings 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 WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and WPG Holdings.
Diversification Opportunities for GlaxoSmithKline PLC and WPG Holdings
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlaxoSmithKline and WPG is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and WPG Holdings go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and WPG Holdings
Considering the 90-day investment horizon GlaxoSmithKline PLC is expected to generate 37.0 times less return on investment than WPG Holdings. In addition to that, GlaxoSmithKline PLC is 3.39 times more volatile than WPG Holdings. It trades about 0.0 of its total potential returns per unit of risk. WPG Holdings is currently generating about 0.14 per unit of volatility. If you would invest 4,509 in WPG Holdings on August 26, 2024 and sell it today you would earn a total of 641.00 from holding WPG Holdings or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.59% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. WPG Holdings
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| WPG Holdings |
GlaxoSmithKline PLC and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and WPG Holdings
The main advantage of trading using opposite GlaxoSmithKline PLC and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, WPG Holdings 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 WPG Holdings will offset losses from the drop in WPG Holdings' long position.| GlaxoSmithKline PLC vs. Novartis AG ADR | GlaxoSmithKline PLC vs. AstraZeneca PLC ADR | GlaxoSmithKline PLC vs. Roche Holding Ltd | GlaxoSmithKline PLC vs. Bristol Myers Squibb |
| WPG Holdings vs. GrandTech CG Systems | WPG Holdings vs. Answer Technology Co | WPG Holdings vs. Xander International | WPG Holdings vs. Weblink International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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