Correlation Between Spectrum Brands and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Unilever PLC ADR, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Unilever PLC.
Diversification Opportunities for Spectrum Brands and Unilever PLC
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Spectrum and Unilever is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings 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 Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Unilever PLC go up and down completely randomly.
Pair Corralation between Spectrum Brands and Unilever PLC
Considering the 90-day investment horizon Spectrum Brands Holdings is expected to under-perform the Unilever PLC. In addition to that, Spectrum Brands is 2.17 times more volatile than Unilever PLC ADR. It trades about -0.02 of its total potential returns per unit of risk. Unilever PLC ADR is currently generating about 0.2 per unit of volatility. If you would invest 5,790 in Unilever PLC ADR on September 19, 2024 and sell it today you would earn a total of 140.00 from holding Unilever PLC ADR or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Unilever PLC ADR
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Unilever PLC ADR |
Spectrum Brands and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and Unilever PLC
The main advantage of trading using opposite Spectrum Brands and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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