Correlation Between Unilever PLC and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Unilever PLC and Colgate Palmolive 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 Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and Colgate Palmolive, you can compare the effects of market volatilities on Unilever PLC and Colgate Palmolive 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 Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Colgate Palmolive.
Diversification Opportunities for Unilever PLC and Colgate Palmolive
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unilever and Colgate is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive 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 Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Unilever PLC i.e., Unilever PLC and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Unilever PLC and Colgate Palmolive
Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.64 times more return on investment than Colgate Palmolive. However, Unilever PLC is 1.57 times less risky than Colgate Palmolive. It trades about 0.02 of its potential returns per unit of risk. Colgate Palmolive is currently generating about -0.09 per unit of risk. If you would invest 32,811 in Unilever PLC on July 17, 2025 and sell it today you would earn a total of 420.00 from holding Unilever PLC or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. Colgate Palmolive
Performance |
| Timeline |
| Unilever PLC |
| Colgate Palmolive |
Unilever PLC and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Colgate Palmolive
The main advantage of trading using opposite Unilever PLC and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Unilever PLC vs. The Procter Gamble | Unilever PLC vs. The Este Lauder | Unilever PLC vs. Colgate Palmolive | Unilever PLC vs. Kimberly Clark |
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Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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