Correlation Between Unilever PLC and CHS
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and CHS 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 CHS 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 CHS Inc CP, you can compare the effects of market volatilities on Unilever PLC and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and CHS.
Diversification Opportunities for Unilever PLC and CHS
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unilever and CHS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and CHS Inc CP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CP 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 CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CP has no effect on the direction of Unilever PLC i.e., Unilever PLC and CHS go up and down completely randomly.
Pair Corralation between Unilever PLC and CHS
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.98 times more return on investment than CHS. However, Unilever PLC ADR is 1.02 times less risky than CHS. It trades about 0.1 of its potential returns per unit of risk. CHS Inc CP is currently generating about -0.01 per unit of risk. If you would invest 4,637 in Unilever PLC ADR on September 14, 2024 and sell it today you would earn a total of 1,246 from holding Unilever PLC ADR or generate 26.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Unilever PLC ADR vs. CHS Inc CP
Performance |
| Timeline |
| Unilever PLC ADR |
| CHS Inc CP |
Unilever PLC and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and CHS
The main advantage of trading using opposite Unilever PLC and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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