Correlation Between Universal Display and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Universal Display and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Universal Display and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Spotify Technology.
Diversification Opportunities for Universal Display and Spotify Technology
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Spotify is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Universal Display i.e., Universal Display and Spotify Technology go up and down completely randomly.
Pair Corralation between Universal Display and Spotify Technology
Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Spotify Technology. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display Corp is 1.31 times less risky than Spotify Technology. The stock trades about -0.17 of its potential returns per unit of risk. The Spotify Technology SA is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 35,680 in Spotify Technology SA on November 6, 2024 and sell it today you would earn a total of 22,930 from holding Spotify Technology SA or generate 64.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.94% |
| Values | Daily Returns |
Universal Display Corp vs. Spotify Technology SA
Performance |
| Timeline |
| Universal Display Corp |
| Spotify Technology |
Universal Display and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Spotify Technology
The main advantage of trading using opposite Universal Display and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Universal Display vs. Dolly Varden Silver | Universal Display vs. First Majestic Silver | Universal Display vs. MTI Wireless Edge | Universal Display vs. Hochschild Mining plc |
| Spotify Technology vs. Endeavour Mining Corp | Spotify Technology vs. Fulcrum Metals PLC | Spotify Technology vs. McEwen Mining | Spotify Technology vs. AMG Advanced Metallurgical |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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