Correlation Between Unilever PLC and Vienna Insurance

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

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

Diversification Opportunities for Unilever PLC and Vienna Insurance

0.76

Correlation Coefficient

Unilever PLC  Vienna Insurance

Poor diversification

The 3 months correlation between Unilever and Vienna is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance 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 are associated (or correlated) with Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Unilever PLC i.e., Unilever PLC and Vienna Insurance go up and down completely randomly.

Pair Corralation between Unilever PLC and Vienna Insurance

Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.89 times more return on investment than Vienna Insurance. However, Unilever PLC is 1.13 times less risky than Vienna Insurance. It trades about -0.06 of its potential returns per unit of risk. Vienna Insurance Group is currently generating about -0.13 per unit of risk. If you would invest  5,846  in Unilever PLC on September 3, 2024 and sell it today you would lose (192.00) from holding Unilever PLC or give up 3.28% of portfolio value over 90 days.

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

Unilever PLC  vs.  Vienna Insurance Group

Unilever PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unilever PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Unilever PLC is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Vienna Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vienna Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Unilever PLC and Vienna Insurance

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

The idea behind Unilever PLC and Vienna Insurance Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.