Correlation Between Unilever PLC and BG Foods
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and BG Foods 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 BG Foods 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 BG Foods, you can compare the effects of market volatilities on Unilever PLC and BG Foods 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 BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and BG Foods.
Diversification Opportunities for Unilever PLC and BG Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Unilever and BGS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Unilever PLC i.e., Unilever PLC and BG Foods go up and down completely randomly.
Pair Corralation between Unilever PLC and BG Foods
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.71 times more return on investment than BG Foods. However, Unilever PLC ADR is 1.4 times less risky than BG Foods. It trades about 0.14 of its potential returns per unit of risk. BG Foods is currently generating about -0.29 per unit of risk. If you would invest 5,614 in Unilever PLC ADR on November 9, 2024 and sell it today you would earn a total of 193.00 from holding Unilever PLC ADR or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. BG Foods
Performance |
| Timeline |
| Unilever PLC ADR |
| BG Foods |
Unilever PLC and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and BG Foods
The main advantage of trading using opposite Unilever PLC and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.| Unilever PLC vs. Great Western Minerals | Unilever PLC vs. Enterprise Bancorp | Unilever PLC vs. T Rowe Price | Unilever PLC vs. Aviat Networks |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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