Correlation Between LOral SA and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both LOral SA 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 LOral SA and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOral SA and Unilever PLC, you can compare the effects of market volatilities on LOral SA 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 LOral SA with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOral SA and Unilever PLC.
Diversification Opportunities for LOral SA and Unilever PLC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LOral and Unilever is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LOral SA and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and LOral SA 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 LOral SA 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 LOral SA i.e., LOral SA and Unilever PLC go up and down completely randomly.
Pair Corralation between LOral SA and Unilever PLC
Assuming the 90 days trading horizon LOral SA is expected to under-perform the Unilever PLC. In addition to that, LOral SA is 1.04 times more volatile than Unilever PLC. It trades about -0.18 of its total potential returns per unit of risk. Unilever PLC is currently generating about -0.09 per unit of volatility. If you would invest 5,550 in Unilever PLC on October 9, 2024 and sell it today you would lose (100.00) from holding Unilever PLC or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOral SA vs. Unilever PLC
Performance |
| Timeline |
| LOral SA |
| Unilever PLC |
LOral SA and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOral SA and Unilever PLC
The main advantage of trading using opposite LOral SA and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOral SA 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.| LOral SA vs. Nexstar Media Group | LOral SA vs. Gaztransport Technigaz SA | LOral SA vs. RCS MediaGroup SpA | LOral SA vs. Live Nation Entertainment |
| Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Superior Plus Corp | Unilever PLC vs. NMI Holdings | Unilever PLC vs. SIVERS SEMICONDUCTORS AB |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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