Correlation Between Unilever PLC and UBM Development
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and UBM Development 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 UBM Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and UBM Development AG, you can compare the effects of market volatilities on Unilever PLC and UBM Development 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 UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and UBM Development.
Diversification Opportunities for Unilever PLC and UBM Development
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and UBM is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development AG 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 UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of Unilever PLC i.e., Unilever PLC and UBM Development go up and down completely randomly.
Pair Corralation between Unilever PLC and UBM Development
Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.75 times more return on investment than UBM Development. However, Unilever PLC is 1.33 times less risky than UBM Development. It trades about 0.07 of its potential returns per unit of risk. UBM Development AG is currently generating about -0.03 per unit of risk. If you would invest 4,372 in Unilever PLC on August 24, 2024 and sell it today you would earn a total of 1,060 from holding Unilever PLC or generate 24.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. UBM Development AG
Performance |
| Timeline |
| Unilever PLC |
| UBM Development AG |
Unilever PLC and UBM Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and UBM Development
The main advantage of trading using opposite Unilever PLC and UBM Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, UBM Development 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 UBM Development will offset losses from the drop in UBM Development's long position.| Unilever PLC vs. SBM Offshore NV | Unilever PLC vs. Raiffeisen Bank International | Unilever PLC vs. Vienna Insurance Group | Unilever PLC vs. Oberbank AG |
| UBM Development vs. CA Immobilien Anlagen | UBM Development vs. S IMMO AG | UBM Development vs. IMMOFINANZ AG | UBM Development vs. Wienerberger AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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