Correlation Between NN Group and Unilever PLC

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

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

Diversification Opportunities for NN Group and Unilever PLC

-0.5

Correlation Coefficient

NN Group  Unilever PLC

Very good diversification

The 3 months correlation between NN Group and Unilever is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC and NN Group 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 NN Group NV are associated (or correlated) with Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of NN Group i.e., NN Group and Unilever PLC go up and down completely randomly.

Pair Corralation between NN Group and Unilever PLC

Assuming the 90 days horizon NN Group NV is expected to generate 0.88 times more return on investment than Unilever PLC. However, NN Group NV is 1.14 times less risky than Unilever PLC. It trades about 0.32 of its potential returns per unit of risk. Unilever PLC is currently generating about -0.16 per unit of risk. If you would invest  5,009  in NN Group NV on April 23, 2025 and sell it today you would earn a total of  787.00  from holding NN Group NV or generate 15.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

NN Group NV  vs.  Unilever PLC

NN Group NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NN Group NV are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NN Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Unilever PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unilever PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NN Group and Unilever PLC

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

The idea behind NN Group NV and Unilever PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..