Correlation Between Dow Jones and UNIVERSAL DISPLAY
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and UNIVERSAL DISPLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and UNIVERSAL DISPLAY, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of UNIVERSAL DISPLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and UNIVERSAL DISPLAY.
Diversification Opportunities for Dow Jones and UNIVERSAL DISPLAY
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and UNIVERSAL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY and Dow Jones 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 Dow Jones Industrial 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 has no effect on the direction of Dow Jones i.e., Dow Jones and UNIVERSAL DISPLAY go up and down completely randomly.
Pair Corralation between Dow Jones and UNIVERSAL DISPLAY
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the UNIVERSAL DISPLAY. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 3.03 times less risky than UNIVERSAL DISPLAY. The index trades about -0.21 of its potential returns per unit of risk. The UNIVERSAL DISPLAY is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 15,046 in UNIVERSAL DISPLAY on October 12, 2024 and sell it today you would lose (401.00) from holding UNIVERSAL DISPLAY or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Dow Jones Industrial vs. UNIVERSAL DISPLAY
Performance |
| Timeline |
Dow Jones and UNIVERSAL DISPLAY Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
UNIVERSAL DISPLAY
Pair trading matchups for UNIVERSAL DISPLAY
Pair Trading with Dow Jones and UNIVERSAL DISPLAY
The main advantage of trading using opposite Dow Jones and UNIVERSAL DISPLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
| UNIVERSAL DISPLAY vs. HK Electric Investments | UNIVERSAL DISPLAY vs. Gruppo Mutuionline SpA | UNIVERSAL DISPLAY vs. YATRA ONLINE DL 0001 | UNIVERSAL DISPLAY vs. MUTUIONLINE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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