Correlation Between Unilever PLC and Heritage Distilling

Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Heritage Distilling 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 Heritage Distilling 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 Heritage Distilling Holding, you can compare the effects of market volatilities on Unilever PLC and Heritage Distilling 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 Heritage Distilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Heritage Distilling.

Diversification Opportunities for Unilever PLC and Heritage Distilling

-0.52

Correlation Coefficient

Unilever PLC  Heritage Distilling

Excellent diversification

The 3 months correlation between Unilever and Heritage is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and Heritage Distilling Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Distilling 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 Heritage Distilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Distilling has no effect on the direction of Unilever PLC i.e., Unilever PLC and Heritage Distilling go up and down completely randomly.

Pair Corralation between Unilever PLC and Heritage Distilling

Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 0.17 times more return on investment than Heritage Distilling. However, Unilever PLC ADR is 5.89 times less risky than Heritage Distilling. It trades about 0.07 of its potential returns per unit of risk. Heritage Distilling Holding is currently generating about -0.23 per unit of risk. If you would invest  5,629  in Unilever PLC ADR on December 29, 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

Unilever PLC ADR  vs.  Heritage Distilling Holding

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Heritage Distilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heritage Distilling Holding 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Unilever PLC and Heritage Distilling

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

The idea behind Unilever PLC ADR and Heritage Distilling Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.