Correlation Between Unilever PLC and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on Unilever PLC and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Keurig Dr.
Diversification Opportunities for Unilever PLC and Keurig Dr
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and Keurig is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Unilever PLC i.e., Unilever PLC and Keurig Dr go up and down completely randomly.
Pair Corralation between Unilever PLC and Keurig Dr
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to under-perform the Keurig Dr. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC ADR is 1.2 times less risky than Keurig Dr. The stock trades about -0.13 of its potential returns per unit of risk. The Keurig Dr Pepper is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,288 in Keurig Dr Pepper on August 30, 2024 and sell it today you would lose (30.00) from holding Keurig Dr Pepper or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Keurig Dr Pepper
Performance |
| Timeline |
| Unilever PLC ADR |
| Keurig Dr Pepper |
Unilever PLC and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Keurig Dr
The main advantage of trading using opposite Unilever PLC and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Church Dwight | Unilever PLC vs. Kimberly Clark |
| Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Coca Cola European Partners | Keurig Dr vs. Capital Income Builder | Keurig Dr vs. Direxion Daily FTSE |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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