Correlation Between Unilever PLC and Biglari Holdings

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

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

Diversification Opportunities for Unilever PLC and Biglari Holdings

-0.38

Correlation Coefficient

Unilever PLC  Biglari Holdings

Very good diversification

The 3 months correlation between Unilever and Biglari is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings 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 ADR are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Unilever PLC i.e., Unilever PLC and Biglari Holdings go up and down completely randomly.

Pair Corralation between Unilever PLC and Biglari Holdings

Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.52 times more return on investment than Biglari Holdings. However, Unilever PLC ADR is 1.93 times less risky than Biglari Holdings. It trades about 0.05 of its potential returns per unit of risk. Biglari Holdings is currently generating about -0.12 per unit of risk. If you would invest  5,629  in Unilever PLC ADR on December 28, 2024 and sell it today you would earn a total of  190.00  from holding Unilever PLC ADR or generate 3.38% return on investment over 90 days.

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

Unilever PLC ADR  vs.  Biglari Holdings

Unilever PLC ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unilever PLC ADR are ranked lower than 3 (%) 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.

Biglari Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biglari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Unilever PLC and Biglari Holdings

The main advantage of trading using opposite Unilever PLC and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.

The idea behind Unilever PLC ADR and Biglari Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.