Correlation Between Unilever PLC and Waldencast Acquisition
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Waldencast Acquisition 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 Waldencast Acquisition 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 Waldencast Acquisition Corp, you can compare the effects of market volatilities on Unilever PLC and Waldencast Acquisition 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 Waldencast Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Waldencast Acquisition.
Diversification Opportunities for Unilever PLC and Waldencast Acquisition
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unilever and Waldencast is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition 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 Waldencast Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waldencast Acquisition has no effect on the direction of Unilever PLC i.e., Unilever PLC and Waldencast Acquisition go up and down completely randomly.
Pair Corralation between Unilever PLC and Waldencast Acquisition
Allowing for the 90-day total investment horizon Unilever PLC is expected to generate 7.7 times less return on investment than Waldencast Acquisition. But when comparing it to its historical volatility, Unilever PLC ADR is 13.0 times less risky than Waldencast Acquisition. It trades about 0.05 of its potential returns per unit of risk. Waldencast Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 74.00 in Waldencast Acquisition Corp on August 28, 2024 and sell it today you would lose (60.00) from holding Waldencast Acquisition Corp or give up 81.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Waldencast Acquisition Corp
Performance |
| Timeline |
| Unilever PLC ADR |
| Waldencast Acquisition |
Unilever PLC and Waldencast Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Waldencast Acquisition
The main advantage of trading using opposite Unilever PLC and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Waldencast Acquisition 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 Waldencast Acquisition will offset losses from the drop in Waldencast Acquisition'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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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