Correlation Between Universal Display and American Aires
Can any of the company-specific risk be diversified away by investing in both Universal Display and American Aires 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 Universal Display and American Aires into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and American Aires, you can compare the effects of market volatilities on Universal Display and American Aires 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 Universal Display with a short position of American Aires. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and American Aires.
Diversification Opportunities for Universal Display and American Aires
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and American Aires in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Aires and Universal Display 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 Universal Display are associated (or correlated) with American Aires. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Aires has no effect on the direction of Universal Display i.e., Universal Display and American Aires go up and down completely randomly.
Pair Corralation between Universal Display and American Aires
Given the investment horizon of 90 days Universal Display is expected to generate 0.33 times more return on investment than American Aires. However, Universal Display is 3.01 times less risky than American Aires. It trades about -0.06 of its potential returns per unit of risk. American Aires is currently generating about -0.04 per unit of risk. If you would invest 20,849 in Universal Display on September 19, 2024 and sell it today you would lose (4,938) from holding Universal Display or give up 23.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. American Aires
Performance |
| Timeline |
| Universal Display |
| American Aires |
Universal Display and American Aires Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and American Aires
The main advantage of trading using opposite Universal Display and American Aires positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, American Aires 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 American Aires will offset losses from the drop in American Aires' long position.The idea behind Universal Display and American Aires pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |