Correlation Between Universal Display and Bunzl PLC
Can any of the company-specific risk be diversified away by investing in both Universal Display and Bunzl PLC 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 Bunzl PLC 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 Bunzl PLC, you can compare the effects of market volatilities on Universal Display and Bunzl PLC 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 Bunzl PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Bunzl PLC.
Diversification Opportunities for Universal Display and Bunzl PLC
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and Bunzl is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Bunzl PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl PLC 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 Bunzl PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl PLC has no effect on the direction of Universal Display i.e., Universal Display and Bunzl PLC go up and down completely randomly.
Pair Corralation between Universal Display and Bunzl PLC
Assuming the 90 days trading horizon Universal Display is expected to generate 13.88 times less return on investment than Bunzl PLC. In addition to that, Universal Display is 2.87 times more volatile than Bunzl PLC. It trades about 0.01 of its total potential returns per unit of risk. Bunzl PLC is currently generating about 0.24 per unit of volatility. If you would invest 330,600 in Bunzl PLC on November 3, 2024 and sell it today you would earn a total of 14,200 from holding Bunzl PLC or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Universal Display Corp vs. Bunzl PLC
Performance |
| Timeline |
| Universal Display Corp |
| Bunzl PLC |
Universal Display and Bunzl PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Bunzl PLC
The main advantage of trading using opposite Universal Display and Bunzl PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Bunzl PLC 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 Bunzl PLC will offset losses from the drop in Bunzl PLC's long position.| Universal Display vs. Catena Media PLC | Universal Display vs. Atresmedia | Universal Display vs. G5 Entertainment AB | Universal Display vs. Bloomsbury Publishing Plc |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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