Correlation Between Helen Of and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Helen Of 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 Helen Of and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Helen of Troy and Unilever PLC ADR, you can compare the effects of market volatilities on Helen Of 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 Helen Of with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helen Of and Unilever PLC.
Diversification Opportunities for Helen Of and Unilever PLC
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Helen and Unilever is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Helen of Troy and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR and Helen Of 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 Helen of Troy 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 ADR has no effect on the direction of Helen Of i.e., Helen Of and Unilever PLC go up and down completely randomly.
Pair Corralation between Helen Of and Unilever PLC
Given the investment horizon of 90 days Helen of Troy is expected to generate 1.82 times more return on investment than Unilever PLC. However, Helen Of is 1.82 times more volatile than Unilever PLC ADR. It trades about 0.28 of its potential returns per unit of risk. Unilever PLC ADR is currently generating about -0.09 per unit of risk. If you would invest 6,421 in Helen of Troy on August 31, 2024 and sell it today you would earn a total of 830.00 from holding Helen of Troy or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Helen of Troy vs. Unilever PLC ADR
Performance |
| Timeline |
| Helen of Troy |
| Unilever PLC ADR |
Helen Of and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Helen Of and Unilever PLC
The main advantage of trading using opposite Helen Of and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helen Of 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.| Helen Of vs. Inter Parfums | Helen Of vs. J J Snack | Helen Of vs. Lancaster Colony | Helen Of vs. Dorman Products |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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