Correlation Between Unilever PLC and Rocky Brands
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Rocky Brands 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 Rocky Brands 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 Rocky Brands, you can compare the effects of market volatilities on Unilever PLC and Rocky Brands 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 Rocky Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Rocky Brands.
Diversification Opportunities for Unilever PLC and Rocky Brands
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Unilever and Rocky is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands 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 Rocky Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Brands has no effect on the direction of Unilever PLC i.e., Unilever PLC and Rocky Brands go up and down completely randomly.
Pair Corralation between Unilever PLC and Rocky Brands
Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.18 times more return on investment than Rocky Brands. However, Unilever PLC ADR is 5.58 times less risky than Rocky Brands. It trades about -0.09 of its potential returns per unit of risk. Rocky Brands is currently generating about -0.14 per unit of risk. If you would invest 6,111 in Unilever PLC ADR on August 31, 2024 and sell it today you would lose (137.00) from holding Unilever PLC ADR or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Rocky Brands
Performance |
| Timeline |
| Unilever PLC ADR |
| Rocky Brands |
Unilever PLC and Rocky Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Rocky Brands
The main advantage of trading using opposite Unilever PLC and Rocky Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Rocky Brands 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 Rocky Brands will offset losses from the drop in Rocky Brands' long position.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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