Correlation Between Universal Display and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Universal Display and Xponential Fitness 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 Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Xponential Fitness, you can compare the effects of market volatilities on Universal Display and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Xponential Fitness.
Diversification Opportunities for Universal Display and Xponential Fitness
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Xponential is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Universal Display i.e., Universal Display and Xponential Fitness go up and down completely randomly.
Pair Corralation between Universal Display and Xponential Fitness
Given the investment horizon of 90 days Universal Display is expected to generate 0.44 times more return on investment than Xponential Fitness. However, Universal Display is 2.27 times less risky than Xponential Fitness. It trades about 0.03 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.0 per unit of risk. If you would invest 13,749 in Universal Display on August 29, 2024 and sell it today you would earn a total of 2,431 from holding Universal Display or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Xponential Fitness
Performance |
| Timeline |
| Universal Display |
| Xponential Fitness |
Universal Display and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Xponential Fitness
The main advantage of trading using opposite Universal Display and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.The idea behind Universal Display and Xponential Fitness 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.| Xponential Fitness vs. Planet Fitness | Xponential Fitness vs. Bowlero Corp | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Acushnet Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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