Correlation Between Universal Display and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Universal Display and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on Universal Display and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Jacquet Metal.
Diversification Opportunities for Universal Display and Jacquet Metal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and Jacquet is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Universal Display i.e., Universal Display and Jacquet Metal go up and down completely randomly.
Pair Corralation between Universal Display and Jacquet Metal
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 1.79 times more return on investment than Jacquet Metal. However, Universal Display is 1.79 times more volatile than Jacquet Metal Service. It trades about 0.03 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.01 per unit of risk. If you would invest 13,513 in Universal Display Corp on August 31, 2024 and sell it today you would earn a total of 2,687 from holding Universal Display Corp or generate 19.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.44% |
| Values | Daily Returns |
Universal Display Corp vs. Jacquet Metal Service
Performance |
| Timeline |
| Universal Display Corp |
| Jacquet Metal Service |
Universal Display and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Jacquet Metal
The main advantage of trading using opposite Universal Display and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Universal Display vs. Neometals | Universal Display vs. Coor Service Management | Universal Display vs. Aeorema Communications Plc | Universal Display vs. JLEN Environmental Assets |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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