Correlation Between Unilever PLC and Olaplex Holdings
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Olaplex Holdings 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 Olaplex Holdings 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 Olaplex Holdings, you can compare the effects of market volatilities on Unilever PLC and Olaplex Holdings 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 Olaplex Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Olaplex Holdings.
Diversification Opportunities for Unilever PLC and Olaplex Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unilever and Olaplex is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Olaplex Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olaplex Holdings 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 Olaplex Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olaplex Holdings has no effect on the direction of Unilever PLC i.e., Unilever PLC and Olaplex Holdings go up and down completely randomly.
Pair Corralation between Unilever PLC and Olaplex Holdings
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to under-perform the Olaplex Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC ADR is 4.49 times less risky than Olaplex Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The Olaplex Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 215.00 in Olaplex Holdings on August 27, 2024 and sell it today you would lose (7.00) from holding Olaplex Holdings or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Olaplex Holdings
Performance |
| Timeline |
| Unilever PLC ADR |
| Olaplex Holdings |
Unilever PLC and Olaplex Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Olaplex Holdings
The main advantage of trading using opposite Unilever PLC and Olaplex Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Olaplex Holdings 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 Olaplex Holdings will offset losses from the drop in Olaplex Holdings' long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| Olaplex Holdings vs. 1 800 FLOWERSCOM | Olaplex Holdings vs. National Vision Holdings | Olaplex Holdings vs. Leslies | Olaplex Holdings vs. ODP 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |