Correlation Between GlaxoSmithKline PLC and Whirlpool
Can any of the company-specific risk be diversified away by investing in both GlaxoSmithKline PLC and Whirlpool 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 Whirlpool 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 Whirlpool SA, you can compare the effects of market volatilities on GlaxoSmithKline PLC and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlaxoSmithKline PLC and Whirlpool.
Diversification Opportunities for GlaxoSmithKline PLC and Whirlpool
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlaxoSmithKline and Whirlpool is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GlaxoSmithKline PLC ADR and Whirlpool SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool SA 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool SA has no effect on the direction of GlaxoSmithKline PLC i.e., GlaxoSmithKline PLC and Whirlpool go up and down completely randomly.
Pair Corralation between GlaxoSmithKline PLC and Whirlpool
Considering the 90-day investment horizon GlaxoSmithKline PLC ADR is expected to under-perform the Whirlpool. In addition to that, GlaxoSmithKline PLC is 1.25 times more volatile than Whirlpool SA. It trades about -0.24 of its total potential returns per unit of risk. Whirlpool SA is currently generating about -0.16 per unit of volatility. If you would invest 468.00 in Whirlpool SA on August 26, 2024 and sell it today you would lose (38.00) from holding Whirlpool SA or give up 8.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
GlaxoSmithKline PLC ADR vs. Whirlpool SA
Performance |
| Timeline |
| GlaxoSmithKline PLC ADR |
| Whirlpool SA |
GlaxoSmithKline PLC and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlaxoSmithKline PLC and Whirlpool
The main advantage of trading using opposite GlaxoSmithKline PLC and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlaxoSmithKline PLC position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's 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 |
| Whirlpool vs. Lupatech SA | Whirlpool vs. Rossi Residencial SA | Whirlpool vs. Fras le SA | Whirlpool vs. Clave Indices De |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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