Correlation Between Unilever PLC and Beiersdorf
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Beiersdorf 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 Unilever PLC and Beiersdorf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC ADR and Beiersdorf AG ADR, you can compare the effects of market volatilities on Unilever PLC and Beiersdorf 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 Unilever PLC with a short position of Beiersdorf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Beiersdorf.
Diversification Opportunities for Unilever PLC and Beiersdorf
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and Beiersdorf is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Beiersdorf AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beiersdorf AG ADR and Unilever PLC 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 Unilever PLC ADR are associated (or correlated) with Beiersdorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beiersdorf AG ADR has no effect on the direction of Unilever PLC i.e., Unilever PLC and Beiersdorf go up and down completely randomly.
Pair Corralation between Unilever PLC and Beiersdorf
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.79 times more return on investment than Beiersdorf. However, Unilever PLC ADR is 1.26 times less risky than Beiersdorf. It trades about 0.08 of its potential returns per unit of risk. Beiersdorf AG ADR is currently generating about -0.12 per unit of risk. If you would invest 5,439 in Unilever PLC ADR on August 31, 2024 and sell it today you would earn a total of 545.00 from holding Unilever PLC ADR or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Beiersdorf AG ADR
Performance |
| Timeline |
| Unilever PLC ADR |
| Beiersdorf AG ADR |
Unilever PLC and Beiersdorf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Beiersdorf
The main advantage of trading using opposite Unilever PLC and Beiersdorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Beiersdorf 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 Beiersdorf will offset losses from the drop in Beiersdorf's long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| Beiersdorf vs. European Wax Center | Beiersdorf vs. Edgewell Personal Care | Beiersdorf vs. Inter Parfums | Beiersdorf vs. Mannatech Incorporated |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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