Correlation Between Universal Display and JD Sports
Can any of the company-specific risk be diversified away by investing in both Universal Display and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Universal Display and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and JD Sports.
Diversification Opportunities for Universal Display and JD Sports
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and JD Sports is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Universal Display i.e., Universal Display and JD Sports go up and down completely randomly.
Pair Corralation between Universal Display and JD Sports
Assuming the 90 days trading horizon Universal Display Corp is expected to generate 0.99 times more return on investment than JD Sports. However, Universal Display Corp is 1.01 times less risky than JD Sports. It trades about -0.24 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.45 per unit of risk. If you would invest 20,345 in Universal Display Corp on August 27, 2024 and sell it today you would lose (3,471) from holding Universal Display Corp or give up 17.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display Corp vs. JD Sports Fashion
Performance |
| Timeline |
| Universal Display Corp |
| JD Sports Fashion |
Universal Display and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and JD Sports
The main advantage of trading using opposite Universal Display and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Universal Display vs. Samsung Electronics Co | Universal Display vs. Samsung Electronics Co | Universal Display vs. Hyundai Motor | Universal Display vs. Toyota Motor Corp |
| JD Sports vs. Universal Display Corp | JD Sports vs. Gamma Communications PLC | JD Sports vs. Leroy Seafood Group | JD Sports vs. Batm Advanced Communications |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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