Correlation Between Universal Display and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Universal Display and PepsiCo 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 PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and PepsiCo, you can compare the effects of market volatilities on Universal Display and PepsiCo 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 PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and PepsiCo.
Diversification Opportunities for Universal Display and PepsiCo
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and PepsiCo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo 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 PepsiCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepsiCo has no effect on the direction of Universal Display i.e., Universal Display and PepsiCo go up and down completely randomly.
Pair Corralation between Universal Display and PepsiCo
Given the investment horizon of 90 days Universal Display is expected to generate 2.44 times more return on investment than PepsiCo. However, Universal Display is 2.44 times more volatile than PepsiCo. It trades about 0.05 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 10,536 in Universal Display on September 12, 2024 and sell it today you would earn a total of 5,399 from holding Universal Display or generate 51.24% 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. PepsiCo
Performance |
| Timeline |
| Universal Display |
| PepsiCo |
Universal Display and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and PepsiCo
The main advantage of trading using opposite Universal Display and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, PepsiCo 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 PepsiCo will offset losses from the drop in PepsiCo's long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |