Correlation Between Etsy and Universal Display
Can any of the company-specific risk be diversified away by investing in both Etsy and Universal Display 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 Etsy and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and Universal Display Corp, you can compare the effects of market volatilities on Etsy and Universal Display 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 Etsy with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Universal Display.
Diversification Opportunities for Etsy and Universal Display
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Etsy and Universal is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp and Etsy 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 Etsy Inc are associated (or correlated) with Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of Etsy i.e., Etsy and Universal Display go up and down completely randomly.
Pair Corralation between Etsy and Universal Display
Assuming the 90 days trading horizon Etsy Inc is expected to under-perform the Universal Display. But the stock apears to be less risky and, when comparing its historical volatility, Etsy Inc is 1.03 times less risky than Universal Display. The stock trades about -0.03 of its potential returns per unit of risk. The Universal Display Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,571 in Universal Display Corp on August 31, 2024 and sell it today you would earn a total of 1,840 from holding Universal Display Corp or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.22% |
| Values | Daily Returns |
Etsy Inc vs. Universal Display Corp
Performance |
| Timeline |
| Etsy Inc |
| Universal Display Corp |
Etsy and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etsy and Universal Display
The main advantage of trading using opposite Etsy and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| Etsy vs. Norwegian Air Shuttle | Etsy vs. Pentair PLC | Etsy vs. Air Products Chemicals | Etsy vs. Alaska Air Group |
| Universal Display vs. Neometals | Universal Display vs. Coor Service Management | Universal Display vs. Aeorema Communications Plc | Universal Display vs. JLEN Environmental Assets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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