Correlation Between Unilever PLC and NN Group
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and NN Group 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 NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and NN Group NV, you can compare the effects of market volatilities on Unilever PLC and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and NN Group.
Diversification Opportunities for Unilever PLC and NN Group
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Unilever and NN Group is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Unilever PLC i.e., Unilever PLC and NN Group go up and down completely randomly.
Pair Corralation between Unilever PLC and NN Group
Assuming the 90 days trading horizon Unilever PLC is expected to generate 1.02 times more return on investment than NN Group. However, Unilever PLC is 1.02 times more volatile than NN Group NV. It trades about -0.07 of its potential returns per unit of risk. NN Group NV is currently generating about -0.1 per unit of risk. If you would invest 5,538 in Unilever PLC on August 24, 2024 and sell it today you would lose (82.00) from holding Unilever PLC or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. NN Group NV
Performance |
| Timeline |
| Unilever PLC |
| NN Group NV |
Unilever PLC and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and NN Group
The main advantage of trading using opposite Unilever PLC and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group'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 |
| NN Group vs. Koninklijke Ahold Delhaize | NN Group vs. BE Semiconductor Industries | NN Group vs. Aegon NV | NN Group vs. Aalberts Industries NV |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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