Correlation Between Eastern and Universal Display
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Universal Display, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Universal Display.
Diversification Opportunities for Eastern and Universal Display
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and Universal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Universal Display go up and down completely randomly.
Pair Corralation between Eastern and Universal Display
Considering the 90-day investment horizon Eastern Co is expected to generate 0.91 times more return on investment than Universal Display. However, Eastern Co is 1.1 times less risky than Universal Display. It trades about -0.16 of its potential returns per unit of risk. Universal Display is currently generating about -0.43 per unit of risk. If you would invest 3,152 in Eastern Co on August 30, 2024 and sell it today you would lose (301.00) from holding Eastern Co or give up 9.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Universal Display
Performance |
| Timeline |
| Eastern |
| Universal Display |
Eastern and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Universal Display
The main advantage of trading using opposite Eastern and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. AB SKF | Eastern vs. Kennametal |
| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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