Correlation Between Unilever PLC and Central Garden
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Central Garden 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 Central Garden 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 Central Garden Pet, you can compare the effects of market volatilities on Unilever PLC and Central Garden 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 Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Central Garden.
Diversification Opportunities for Unilever PLC and Central Garden
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Unilever and Central is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet 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 Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of Unilever PLC i.e., Unilever PLC and Central Garden go up and down completely randomly.
Pair Corralation between Unilever PLC and Central Garden
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to under-perform the Central Garden. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC ADR is 1.32 times less risky than Central Garden. The stock trades about -0.13 of its potential returns per unit of risk. The Central Garden Pet is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 3,461 in Central Garden Pet on August 30, 2024 and sell it today you would earn a total of 555.00 from holding Central Garden Pet or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Central Garden Pet
Performance |
| Timeline |
| Unilever PLC ADR |
| Central Garden Pet |
Unilever PLC and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Central Garden
The main advantage of trading using opposite Unilever PLC and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. McCormick Company Incorporated | Central Garden vs. Natures Sunshine Products | Central Garden vs. Seneca Foods Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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