Correlation Between Spirent Communications and Universal Display
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Universal Display Corp, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Universal Display.
Diversification Opportunities for Spirent Communications and Universal Display
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spirent and Universal is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Universal Display go up and down completely randomly.
Pair Corralation between Spirent Communications and Universal Display
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.24 times more return on investment than Universal Display. However, Spirent Communications plc is 4.09 times less risky than Universal Display. It trades about 0.08 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 17,130 in Spirent Communications plc on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Spirent Communications plc or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Universal Display Corp
Performance |
| Timeline |
| Spirent Communications |
| Universal Display Corp |
Spirent Communications and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Universal Display
The main advantage of trading using opposite Spirent Communications and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals Holdings |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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