Correlation Between Energizer Holdings and Unilever PLC

Can any of the company-specific risk be diversified away by investing in both Energizer Holdings 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 Energizer Holdings and Unilever PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energizer Holdings and Unilever PLC ADR, you can compare the effects of market volatilities on Energizer Holdings 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 Energizer Holdings with a short position of Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energizer Holdings and Unilever PLC.

Diversification Opportunities for Energizer Holdings and Unilever PLC

-0.57

Correlation Coefficient

Energizer Holdings  Unilever PLC

Excellent diversification

The 3 months correlation between Energizer and Unilever is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings 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 Energizer Holdings 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 Energizer Holdings 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 Energizer Holdings i.e., Energizer Holdings and Unilever PLC go up and down completely randomly.

Pair Corralation between Energizer Holdings and Unilever PLC

Considering the 90-day investment horizon Energizer Holdings is expected to under-perform the Unilever PLC. In addition to that, Energizer Holdings is 1.04 times more volatile than Unilever PLC ADR. It trades about -0.18 of its total potential returns per unit of risk. Unilever PLC ADR is currently generating about 0.07 per unit of volatility. If you would invest  5,629  in Unilever PLC ADR on December 30, 2024 and sell it today you would earn a total of  289.00  from holding Unilever PLC ADR or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Energizer Holdings  vs.  Unilever PLC ADR

Energizer Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energizer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Unilever PLC ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unilever PLC ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Unilever PLC is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Energizer Holdings and Unilever PLC

The main advantage of trading using opposite Energizer Holdings and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energizer Holdings 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 Energizer Holdings 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.