Correlation Between Unilever PLC and IMCD NV

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

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

Diversification Opportunities for Unilever PLC and IMCD NV

0.67

Correlation Coefficient

Unilever PLC  IMCD NV

Poor diversification

The 3 months correlation between Unilever and IMCD is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and IMCD NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCD NV 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 IMCD NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCD NV has no effect on the direction of Unilever PLC i.e., Unilever PLC and IMCD NV go up and down completely randomly.

Pair Corralation between Unilever PLC and IMCD NV

Assuming the 90 days trading horizon Unilever PLC is expected to under-perform the IMCD NV. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC is 2.39 times less risky than IMCD NV. The stock trades about -0.17 of its potential returns per unit of risk. The IMCD NV is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  11,824  in IMCD NV on April 21, 2025 and sell it today you would lose (584.00) from holding IMCD NV or give up 4.94% 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.  IMCD NV

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 uncertain 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.

IMCD NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days IMCD NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IMCD NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Unilever PLC and IMCD NV

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

The idea behind Unilever PLC and IMCD NV 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.