Correlation Between Suntory Beverage and Unum
Can any of the company-specific risk be diversified away by investing in both Suntory Beverage and Unum 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 Suntory Beverage and Unum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntory Beverage Food and Unum Group, you can compare the effects of market volatilities on Suntory Beverage and Unum 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 Suntory Beverage with a short position of Unum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and Unum.
Diversification Opportunities for Suntory Beverage and Unum
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suntory and Unum is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group and Suntory Beverage 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 Suntory Beverage Food are associated (or correlated) with Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Unum go up and down completely randomly.
Pair Corralation between Suntory Beverage and Unum
Assuming the 90 days horizon Suntory Beverage is expected to generate 3.54 times less return on investment than Unum. In addition to that, Suntory Beverage is 1.81 times more volatile than Unum Group. It trades about 0.01 of its total potential returns per unit of risk. Unum Group is currently generating about 0.04 per unit of volatility. If you would invest 2,173 in Unum Group on September 3, 2024 and sell it today you would earn a total of 356.00 from holding Unum Group or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suntory Beverage Food vs. Unum Group
Performance |
| Timeline |
| Suntory Beverage Food |
| Unum Group |
Suntory Beverage and Unum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntory Beverage and Unum
The main advantage of trading using opposite Suntory Beverage and Unum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage position performs unexpectedly, Unum 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 Unum will offset losses from the drop in Unum's long position.| Suntory Beverage vs. Secom Co Ltd | Suntory Beverage vs. Mitsubishi Estate Co | Suntory Beverage vs. Shimano Inc ADR | Suntory Beverage vs. Sumitomo Chemical Co |
| Unum vs. Keurig Dr Pepper | Unum vs. Chipotle Mexican Grill | Unum vs. Suntory Beverage Food | Unum vs. Shake Shack |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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