Correlation Between Universal Display and Hasbro
Can any of the company-specific risk be diversified away by investing in both Universal Display and Hasbro 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 Hasbro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Hasbro Inc, you can compare the effects of market volatilities on Universal Display and Hasbro 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 Hasbro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Hasbro.
Diversification Opportunities for Universal Display and Hasbro
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and Hasbro is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Universal Display i.e., Universal Display and Hasbro go up and down completely randomly.
Pair Corralation between Universal Display and Hasbro
Given the investment horizon of 90 days Universal Display is expected to generate 1.16 times more return on investment than Hasbro. However, Universal Display is 1.16 times more volatile than Hasbro Inc. It trades about 0.04 of its potential returns per unit of risk. Hasbro Inc is currently generating about 0.02 per unit of risk. If you would invest 11,700 in Universal Display on August 24, 2024 and sell it today you would earn a total of 5,141 from holding Universal Display or generate 43.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Hasbro Inc
Performance |
| Timeline |
| Universal Display |
| Hasbro Inc |
Universal Display and Hasbro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Hasbro
The main advantage of trading using opposite Universal Display and Hasbro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Hasbro 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 Hasbro will offset losses from the drop in Hasbro's long position.| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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