Correlation Between Unilever PLC and European Wax

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

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

Diversification Opportunities for Unilever PLC and European Wax

0.18

Correlation Coefficient

Unilever PLC  European Wax

Average diversification

The 3 months correlation between Unilever and European is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Unilever PLC i.e., Unilever PLC and European Wax go up and down completely randomly.

Pair Corralation between Unilever PLC and European Wax

Assuming the 90 days horizon Unilever PLC is expected to generate 0.67 times more return on investment than European Wax. However, Unilever PLC is 1.49 times less risky than European Wax. It trades about -0.04 of its potential returns per unit of risk. European Wax Center is currently generating about -0.04 per unit of risk. If you would invest  6,413  in Unilever PLC on September 14, 2024 and sell it today you would lose (588.00) from holding Unilever PLC or give up 9.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Unilever PLC  vs.  European Wax Center

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

European Wax Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Wax Center has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Unilever PLC and European Wax

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

The idea behind Unilever PLC and European Wax Center 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.