Correlation Between Lam Research and Universal Display
Can any of the company-specific risk be diversified away by investing in both Lam Research 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 Lam Research and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Research and Universal Display, you can compare the effects of market volatilities on Lam Research 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 Lam Research with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and Universal Display.
Diversification Opportunities for Lam Research and Universal Display
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lam and Universal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Lam Research 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 Lam Research 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 Lam Research i.e., Lam Research and Universal Display go up and down completely randomly.
Pair Corralation between Lam Research and Universal Display
Assuming the 90 days horizon Lam Research is not expected to generate positive returns. However, Lam Research is 1.16 times less risky than Universal Display. It waists most of its returns potential to compensate for thr risk taken. Universal Display is generating about 0.02 per unit of risk. If you would invest 15,809 in Universal Display on August 28, 2024 and sell it today you would earn a total of 491.00 from holding Universal Display or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.53% |
| Values | Daily Returns |
Lam Research vs. Universal Display
Performance |
| Timeline |
| Lam Research |
| Universal Display |
Lam Research and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Research and Universal Display
The main advantage of trading using opposite Lam Research and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research 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.| Lam Research vs. Transportadora de Gas | Lam Research vs. Texas Roadhouse | Lam Research vs. Broadcom | Lam Research vs. Harmony Gold Mining |
| Universal Display vs. Applied Materials | Universal Display vs. Superior Plus Corp | Universal Display vs. NMI Holdings | Universal Display vs. Origin Agritech |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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