Correlation Between Universal Electronics and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Universal Electronics and Emerson Radio 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 Electronics and Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Electronics and Emerson Radio, you can compare the effects of market volatilities on Universal Electronics and Emerson Radio 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 Electronics with a short position of Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Electronics and Emerson Radio.
Diversification Opportunities for Universal Electronics and Emerson Radio
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Emerson is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and Universal Electronics 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 Electronics are associated (or correlated) with Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Universal Electronics i.e., Universal Electronics and Emerson Radio go up and down completely randomly.
Pair Corralation between Universal Electronics and Emerson Radio
Given the investment horizon of 90 days Universal Electronics is expected to under-perform the Emerson Radio. In addition to that, Universal Electronics is 1.19 times more volatile than Emerson Radio. It trades about -0.03 of its total potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of volatility. If you would invest 61.00 in Emerson Radio on November 2, 2024 and sell it today you would lose (11.45) from holding Emerson Radio or give up 18.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Electronics vs. Emerson Radio
Performance |
| Timeline |
| Universal Electronics |
| Emerson Radio |
Universal Electronics and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Electronics and Emerson Radio
The main advantage of trading using opposite Universal Electronics and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Electronics position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Universal Electronics vs. LG Display Co | Universal Electronics vs. Zepp Health Corp | Universal Electronics vs. Sonos Inc | Universal Electronics vs. VOXX International |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Koss Corporation | Emerson Radio vs. Wearable Devices |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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