Correlation Between Unilever PLC and Winning Brands
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Winning 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 Winning 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 Winning Brands Corp, you can compare the effects of market volatilities on Unilever PLC and Winning 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 Winning Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Winning Brands.
Diversification Opportunities for Unilever PLC and Winning Brands
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Unilever and Winning is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Winning Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winning Brands Corp 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 Winning Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winning Brands Corp has no effect on the direction of Unilever PLC i.e., Unilever PLC and Winning Brands go up and down completely randomly.
Pair Corralation between Unilever PLC and Winning Brands
Allowing for the 90-day total investment horizon Unilever PLC is expected to generate 925.81 times less return on investment than Winning Brands. But when comparing it to its historical volatility, Unilever PLC ADR is 314.0 times less risky than Winning Brands. It trades about 0.11 of its potential returns per unit of risk. Winning Brands Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Winning Brands Corp on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Winning Brands Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC ADR vs. Winning Brands Corp
Performance |
| Timeline |
| Unilever PLC ADR |
| Winning Brands Corp |
Unilever PLC and Winning Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Winning Brands
The main advantage of trading using opposite Unilever PLC and Winning Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Winning 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 Winning Brands will offset losses from the drop in Winning Brands' long position.| Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Estee Lauder Companies | Unilever PLC vs. Procter Gamble | Unilever PLC vs. United Guardian |
| Winning Brands vs. LOreal Co ADR | Winning Brands vs. Unilever PLC ADR | Winning Brands vs. Kimberly Clark | Winning Brands vs. The Clorox |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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