Correlation Between Weyco and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Weyco and Unilever PLC 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 Weyco and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Unilever PLC ADR, you can compare the effects of market volatilities on Weyco and Unilever PLC 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 Weyco with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Unilever PLC.
Diversification Opportunities for Weyco and Unilever PLC
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weyco and Unilever is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR and Weyco 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 Weyco Group are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Weyco i.e., Weyco and Unilever PLC go up and down completely randomly.
Pair Corralation between Weyco and Unilever PLC
Given the investment horizon of 90 days Weyco Group is expected to generate 1.14 times more return on investment than Unilever PLC. However, Weyco is 1.14 times more volatile than Unilever PLC ADR. It trades about -0.01 of its potential returns per unit of risk. Unilever PLC ADR is currently generating about -0.1 per unit of risk. If you would invest 3,632 in Weyco Group on November 28, 2024 and sell it today you would lose (27.00) from holding Weyco Group or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Unilever PLC ADR
Performance |
| Timeline |
| Weyco Group |
| Unilever PLC ADR |
Weyco and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Unilever PLC
The main advantage of trading using opposite Weyco and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.The idea behind Weyco Group and Unilever PLC ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Unilever PLC vs. The Clorox | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Procter Gamble | Unilever PLC vs. Church Dwight |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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