Correlation Between ITM Power and Universal Display
Can any of the company-specific risk be diversified away by investing in both ITM Power 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 ITM Power and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITM Power and Universal Display Corp, you can compare the effects of market volatilities on ITM Power 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 ITM Power with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Power and Universal Display.
Diversification Opportunities for ITM Power and Universal Display
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ITM and Universal is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ITM Power 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 ITM Power 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 ITM Power 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 ITM Power i.e., ITM Power and Universal Display go up and down completely randomly.
Pair Corralation between ITM Power and Universal Display
Assuming the 90 days trading horizon ITM Power is expected to under-perform the Universal Display. In addition to that, ITM Power is 1.35 times more volatile than Universal Display Corp. It trades about -0.04 of its total potential returns per unit of risk. Universal Display Corp is currently generating about 0.02 per unit of volatility. If you would invest 15,024 in Universal Display Corp on November 27, 2024 and sell it today you would earn a total of 978.00 from holding Universal Display Corp or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.79% |
| Values | Daily Returns |
ITM Power vs. Universal Display Corp
Performance |
| Timeline |
| ITM Power |
| Universal Display Corp |
ITM Power and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Power and Universal Display
The main advantage of trading using opposite ITM Power and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Power 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.| ITM Power vs. Zoom Video Communications | ITM Power vs. Infrastrutture Wireless Italiane | ITM Power vs. Batm Advanced Communications | ITM Power vs. Monster Beverage Corp |
| Universal Display vs. Ondine Biomedical | Universal Display vs. Aeorema Communications Plc | Universal Display vs. Resolute Mining Limited | Universal Display vs. MTI Wireless Edge |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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