Correlation Between Mercantile Investment and Universal Display
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment 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 Mercantile Investment and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Mercantile Investment and Universal Display Corp, you can compare the effects of market volatilities on Mercantile Investment 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 Mercantile Investment with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Universal Display.
Diversification Opportunities for Mercantile Investment and Universal Display
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mercantile and Universal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment 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 Mercantile Investment i.e., Mercantile Investment and Universal Display go up and down completely randomly.
Pair Corralation between Mercantile Investment and Universal Display
Assuming the 90 days trading horizon The Mercantile Investment is expected to generate 0.35 times more return on investment than Universal Display. However, The Mercantile Investment is 2.86 times less risky than Universal Display. It trades about -0.04 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.24 per unit of risk. If you would invest 24,000 in The Mercantile Investment on August 28, 2024 and sell it today you would lose (300.00) from holding The Mercantile Investment or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Mercantile Investment vs. Universal Display Corp
Performance |
| Timeline |
| The Mercantile Investment |
| Universal Display Corp |
Mercantile Investment and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and Universal Display
The main advantage of trading using opposite Mercantile Investment and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment 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.| Mercantile Investment vs. Catalyst Media Group | Mercantile Investment vs. Oncimmune Holdings plc | Mercantile Investment vs. Invesco Health Care | Mercantile Investment vs. Coor Service Management |
| Universal Display vs. Samsung Electronics Co | Universal Display vs. Samsung Electronics Co | Universal Display vs. Hyundai Motor | Universal Display vs. Toyota Motor Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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