Correlation Between Unilever PLC and Clorox

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

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

Diversification Opportunities for Unilever PLC and Clorox

0.74

Correlation Coefficient

Unilever PLC  Clorox

Poor diversification

The 3 months correlation between Unilever and Clorox is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and The Clorox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clorox 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 Clorox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clorox has no effect on the direction of Unilever PLC i.e., Unilever PLC and Clorox go up and down completely randomly.

Pair Corralation between Unilever PLC and Clorox

Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.86 times more return on investment than Clorox. However, Unilever PLC is 1.16 times less risky than Clorox. It trades about -0.08 of its potential returns per unit of risk. The Clorox is currently generating about -0.14 per unit of risk. If you would invest  36,138  in Unilever PLC on April 24, 2025 and sell it today you would lose (2,445) from holding Unilever PLC or give up 6.77% 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.  The Clorox

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. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Clorox

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Clorox has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Unilever PLC and Clorox

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

The idea behind Unilever PLC and The Clorox 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.