Correlation Between GoldMining and Universal Display
Can any of the company-specific risk be diversified away by investing in both GoldMining and Universal Display 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 GoldMining and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Universal Display Corp, you can compare the effects of market volatilities on GoldMining and Universal Display 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 GoldMining with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Universal Display.
Diversification Opportunities for GoldMining and Universal Display
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between GoldMining and Universal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp and GoldMining 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 GoldMining are associated (or correlated) with Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of GoldMining i.e., GoldMining and Universal Display go up and down completely randomly.
Pair Corralation between GoldMining and Universal Display
Assuming the 90 days trading horizon GoldMining is expected to generate 1.01 times more return on investment than Universal Display. However, GoldMining is 1.01 times more volatile than Universal Display Corp. It trades about -0.16 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.36 per unit of risk. If you would invest 131.00 in GoldMining on August 30, 2024 and sell it today you would lose (10.00) from holding GoldMining or give up 7.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.87% |
| Values | Daily Returns |
GoldMining vs. Universal Display Corp
Performance |
| Timeline |
| GoldMining |
| Universal Display Corp |
GoldMining and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Universal Display
The main advantage of trading using opposite GoldMining and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| GoldMining vs. Ross Stores | GoldMining vs. Zoom Video Communications | GoldMining vs. Cairo Communication SpA | GoldMining vs. Dalata Hotel Group |
| Universal Display vs. Tungsten West PLC | Universal Display vs. Argo Group Limited | Universal Display vs. Hardide PLC | Universal Display vs. Versarien PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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