Correlation Between Unilever PLC and Better Choice
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Better Choice 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 Better Choice 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 Better Choice, you can compare the effects of market volatilities on Unilever PLC and Better Choice 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 Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Better Choice.
Diversification Opportunities for Unilever PLC and Better Choice
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Unilever and Better is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice 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 Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Unilever PLC i.e., Unilever PLC and Better Choice go up and down completely randomly.
Pair Corralation between Unilever PLC and Better Choice
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.38 times more return on investment than Better Choice. However, Unilever PLC ADR is 2.62 times less risky than Better Choice. It trades about 0.06 of its potential returns per unit of risk. Better Choice is currently generating about -0.24 per unit of risk. If you would invest 5,652 in Unilever PLC ADR on November 3, 2024 and sell it today you would earn a total of 86.00 from holding Unilever PLC ADR or generate 1.52% 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. Better Choice
Performance |
| Timeline |
| Unilever PLC ADR |
| Better Choice |
Unilever PLC and Better Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Better Choice
The main advantage of trading using opposite Unilever PLC and Better Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Better Choice 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 Better Choice will offset losses from the drop in Better Choice's long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| Better Choice vs. Stryve Foods | Better Choice vs. BioAdaptives | Better Choice vs. Beyond Oil | Better Choice vs. Else Nutrition Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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