Correlation Between Rheinmetall and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Unilever PLC, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Unilever PLC.
Diversification Opportunities for Rheinmetall and Unilever PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rheinmetall and Unilever is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and Rheinmetall 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 Rheinmetall AG 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 Rheinmetall i.e., Rheinmetall and Unilever PLC go up and down completely randomly.
Pair Corralation between Rheinmetall and Unilever PLC
Assuming the 90 days horizon Rheinmetall AG is expected to generate 1.23 times more return on investment than Unilever PLC. However, Rheinmetall is 1.23 times more volatile than Unilever PLC. It trades about 0.37 of its potential returns per unit of risk. Unilever PLC is currently generating about -0.17 per unit of risk. If you would invest 61,680 in Rheinmetall AG on October 20, 2024 and sell it today you would earn a total of 7,420 from holding Rheinmetall AG or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Unilever PLC
Performance |
| Timeline |
| Rheinmetall AG |
| Unilever PLC |
Rheinmetall and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Unilever PLC
The main advantage of trading using opposite Rheinmetall and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. Eaton PLC | Rheinmetall vs. ABB | Rheinmetall vs. 3M Company | Rheinmetall vs. Emerson Electric Co |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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