Correlation Between Universal Display and Overstock
Can any of the company-specific risk be diversified away by investing in both Universal Display and Overstock 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 Overstock 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 Overstock, you can compare the effects of market volatilities on Universal Display and Overstock 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 Overstock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Overstock.
Diversification Opportunities for Universal Display and Overstock
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Overstock is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Overstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstock 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 Overstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstock has no effect on the direction of Universal Display i.e., Universal Display and Overstock go up and down completely randomly.
Pair Corralation between Universal Display and Overstock
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 0.61 times more return on investment than Overstock. However, Universal Display Corp is 1.64 times less risky than Overstock. It trades about 0.0 of its potential returns per unit of risk. Overstock is currently generating about -0.1 per unit of risk. If you would invest 17,634 in Universal Display Corp on September 1, 2024 and sell it today you would lose (1,223) from holding Universal Display Corp or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.42% |
| Values | Daily Returns |
Universal Display Corp vs. Overstock
Performance |
| Timeline |
| Universal Display Corp |
| Overstock |
Universal Display and Overstock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Overstock
The main advantage of trading using opposite Universal Display and Overstock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Overstock 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 Overstock will offset losses from the drop in Overstock's long position.| Universal Display vs. Uniper SE | Universal Display vs. Mulberry Group PLC | Universal Display vs. London Security Plc | Universal Display vs. Triad Group PLC |
| Overstock vs. Jacquet Metal Service | Overstock vs. Fulcrum Metals PLC | Overstock vs. GreenX Metals | Overstock vs. Future Metals NL |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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