Correlation Between Universal Display and Hershey
Can any of the company-specific risk be diversified away by investing in both Universal Display and Hershey 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 Hershey 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 Hershey Co, you can compare the effects of market volatilities on Universal Display and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Hershey.
Diversification Opportunities for Universal Display and Hershey
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Hershey is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Universal Display i.e., Universal Display and Hershey go up and down completely randomly.
Pair Corralation between Universal Display and Hershey
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 1.97 times more return on investment than Hershey. However, Universal Display is 1.97 times more volatile than Hershey Co. It trades about 0.03 of its potential returns per unit of risk. Hershey Co is currently generating about -0.07 per unit of risk. If you would invest 13,358 in Universal Display Corp on September 25, 2024 and sell it today you would earn a total of 1,767 from holding Universal Display Corp or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.59% |
| Values | Daily Returns |
Universal Display Corp vs. Hershey Co
Performance |
| Timeline |
| Universal Display Corp |
| Hershey |
Universal Display and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Hershey
The main advantage of trading using opposite Universal Display and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Universal Display vs. Broadcom | Universal Display vs. United Utilities Group | Universal Display vs. alstria office REIT AG | Universal Display vs. Broadridge Financial Solutions |
| Hershey vs. XLMedia PLC | Hershey vs. MediaZest plc | Hershey vs. Zinc Media Group | Hershey vs. Nordic Semiconductor ASA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |