Correlation Between Unilever PLC and American Electric
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and American Electric 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 American Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and American Electric Power, you can compare the effects of market volatilities on Unilever PLC and American Electric 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 American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and American Electric.
Diversification Opportunities for Unilever PLC and American Electric
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power 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 are associated (or correlated) with American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of Unilever PLC i.e., Unilever PLC and American Electric go up and down completely randomly.
Pair Corralation between Unilever PLC and American Electric
Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.73 times more return on investment than American Electric. However, Unilever PLC is 1.37 times less risky than American Electric. It trades about 0.05 of its potential returns per unit of risk. American Electric Power is currently generating about 0.02 per unit of risk. If you would invest 388,154 in Unilever PLC on August 29, 2024 and sell it today you would earn a total of 85,146 from holding Unilever PLC or generate 21.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Unilever PLC vs. American Electric Power
Performance |
| Timeline |
| Unilever PLC |
| American Electric Power |
Unilever PLC and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and American Electric
The main advantage of trading using opposite Unilever PLC and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| Unilever PLC vs. Alaska Air Group | Unilever PLC vs. Young Cos Brewery | Unilever PLC vs. Science in Sport | Unilever PLC vs. National Beverage Corp |
| American Electric vs. Cornish Metals | American Electric vs. Diversified Energy | American Electric vs. Taylor Maritime Investments | American Electric vs. Future Metals NL |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |