Correlation Between Universal Display and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Universal Display and Vivendi SA 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 Universal Display and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display Corp and Vivendi SA, you can compare the effects of market volatilities on Universal Display and Vivendi SA 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 Universal Display with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Vivendi SA.
Diversification Opportunities for Universal Display and Vivendi SA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and Vivendi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Universal Display 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 Universal Display Corp are associated (or correlated) with Vivendi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SA has no effect on the direction of Universal Display i.e., Universal Display and Vivendi SA go up and down completely randomly.
Pair Corralation between Universal Display and Vivendi SA
Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Vivendi SA. In addition to that, Universal Display is 1.18 times more volatile than Vivendi SA. It trades about -0.07 of its total potential returns per unit of risk. Vivendi SA is currently generating about 0.13 per unit of volatility. If you would invest 247.00 in Vivendi SA on October 20, 2024 and sell it today you would earn a total of 10.00 from holding Vivendi SA or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Universal Display Corp vs. Vivendi SA
Performance |
| Timeline |
| Universal Display Corp |
| Vivendi SA |
Universal Display and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Vivendi SA
The main advantage of trading using opposite Universal Display and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Vivendi SA 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 Vivendi SA will offset losses from the drop in Vivendi SA's long position.| Universal Display vs. Ross Stores | Universal Display vs. Chrysalis Investments | Universal Display vs. Coor Service Management | Universal Display vs. Qurate Retail Series |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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