Correlation Between Unilever PLC and Heineken
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Heineken 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 Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and Heineken, you can compare the effects of market volatilities on Unilever PLC and Heineken 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 Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Heineken.
Diversification Opportunities for Unilever PLC and Heineken
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and Heineken is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and Heineken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken 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 Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken has no effect on the direction of Unilever PLC i.e., Unilever PLC and Heineken go up and down completely randomly.
Pair Corralation between Unilever PLC and Heineken
Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.87 times more return on investment than Heineken. However, Unilever PLC is 1.14 times less risky than Heineken. It trades about -0.03 of its potential returns per unit of risk. Heineken is currently generating about -0.21 per unit of risk. If you would invest 5,726 in Unilever PLC on August 28, 2024 and sell it today you would lose (120.00) from holding Unilever PLC or give up 2.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. Heineken
Performance |
| Timeline |
| Unilever PLC |
| Heineken |
Unilever PLC and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Heineken
The main advantage of trading using opposite Unilever PLC and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| Unilever PLC vs. Koninklijke Philips NV | Unilever PLC vs. Koninklijke Ahold Delhaize | Unilever PLC vs. ING Groep NV | Unilever PLC vs. Heineken |
| Heineken vs. Unilever PLC | Heineken vs. Koninklijke Philips NV | Heineken vs. Akzo Nobel NV | Heineken vs. Koninklijke Ahold Delhaize |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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