Correlation Between AMS Small and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both AMS Small and Unilever 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 AMS Small and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMS Small Cap and Unilever PLC, you can compare the effects of market volatilities on AMS Small and Unilever 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 AMS Small with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and Unilever PLC.
Diversification Opportunities for AMS Small and Unilever PLC
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AMS and Unilever is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and AMS Small 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 AMS Small Cap are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of AMS Small i.e., AMS Small and Unilever PLC go up and down completely randomly.
Pair Corralation between AMS Small and Unilever PLC
Assuming the 90 days trading horizon AMS Small Cap is expected to under-perform the Unilever PLC. In addition to that, AMS Small is 1.02 times more volatile than Unilever PLC. It trades about 0.0 of its total potential returns per unit of risk. Unilever PLC is currently generating about 0.07 per unit of volatility. If you would invest 4,422 in Unilever PLC on August 31, 2024 and sell it today you would earn a total of 1,236 from holding Unilever PLC or generate 27.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
AMS Small Cap vs. Unilever PLC
Performance |
| Timeline |
AMS Small and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
AMS Small Cap
Pair trading matchups for AMS Small
Unilever PLC
Pair trading matchups for Unilever PLC
Pair Trading with AMS Small and Unilever PLC
The main advantage of trading using opposite AMS Small and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, Unilever 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| AMS Small vs. AMG Advanced Metallurgical | AMS Small vs. Vastned Retail NV | AMS Small vs. Reinet Investments SCA | AMS Small vs. Tetragon Financial Group |
| Unilever PLC vs. Koninklijke Philips NV | Unilever PLC vs. Koninklijke Ahold Delhaize | Unilever PLC vs. ING Groep NV | Unilever PLC vs. Heineken |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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