Correlation Between NN Group and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both NN Group 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 NN Group and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Group NV and Unilever PLC, you can compare the effects of market volatilities on NN Group 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 NN Group with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN Group and Unilever PLC.
Diversification Opportunities for NN Group and Unilever PLC
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between NN Group and Unilever is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and NN Group 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 NN Group NV 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 NN Group i.e., NN Group and Unilever PLC go up and down completely randomly.
Pair Corralation between NN Group and Unilever PLC
Assuming the 90 days horizon NN Group NV is expected to under-perform the Unilever PLC. But the stock apears to be less risky and, when comparing its historical volatility, NN Group NV is 1.11 times less risky than Unilever PLC. The stock trades about -0.17 of its potential returns per unit of risk. The Unilever PLC is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 5,726 in Unilever PLC on August 27, 2024 and sell it today you would lose (120.00) from holding Unilever PLC or give up 2.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NN Group NV vs. Unilever PLC
Performance |
| Timeline |
| NN Group NV |
| Unilever PLC |
NN Group and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN Group and Unilever PLC
The main advantage of trading using opposite NN Group and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN Group 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.| NN Group vs. ASR Nederland NV | NN Group vs. Aegon NV | NN Group vs. Koninklijke Ahold Delhaize | NN Group vs. ABN Amro Group |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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