Correlation Between Unilever PLC and CHURCH

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

Diversification Opportunities for Unilever PLC and CHURCH

0.75

Correlation Coefficient

Unilever PLC  CHURCH

Poor diversification

The 3 months correlation between Unilever and CHURCH is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC ADR and CHURCH DWIGHT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHURCH DWIGHT INC 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 CHURCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHURCH DWIGHT INC has no effect on the direction of Unilever PLC i.e., Unilever PLC and CHURCH go up and down completely randomly.

Pair Corralation between Unilever PLC and CHURCH

Allowing for the 90-day total investment horizon Unilever PLC ADR is expected to generate 2.12 times more return on investment than CHURCH. However, Unilever PLC is 2.12 times more volatile than CHURCH DWIGHT INC. It trades about 0.05 of its potential returns per unit of risk. CHURCH DWIGHT INC is currently generating about 0.02 per unit of risk. If you would invest  4,709  in Unilever PLC ADR on September 24, 2024 and sell it today you would earn a total of  1,007  from holding Unilever PLC ADR or generate 21.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.32%
Values	Daily Returns

Unilever PLC ADR  vs.  CHURCH DWIGHT INC

Unilever PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unilever PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CHURCH DWIGHT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHURCH DWIGHT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CHURCH is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Unilever PLC and CHURCH

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

The idea behind Unilever PLC ADR and CHURCH DWIGHT INC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.