Correlation Between United States and Universal Display
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Universal Display, you can compare the effects of market volatilities on United States 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 United States with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Universal Display.
Diversification Opportunities for United States and Universal Display
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Universal is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and United States 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 United States Steel 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 has no effect on the direction of United States i.e., United States and Universal Display go up and down completely randomly.
Pair Corralation between United States and Universal Display
Assuming the 90 days trading horizon United States Steel is expected to generate 0.96 times more return on investment than Universal Display. However, United States Steel is 1.04 times less risky than Universal Display. It trades about 0.1 of its potential returns per unit of risk. Universal Display is currently generating about -0.2 per unit of risk. If you would invest 3,524 in United States Steel on August 30, 2024 and sell it today you would earn a total of 229.00 from holding United States Steel or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Universal Display
Performance |
| Timeline |
| United States Steel |
| Universal Display |
United States and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Universal Display
The main advantage of trading using opposite United States and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Steel Dynamics | United States vs. Superior Plus Corp | United States vs. SIVERS SEMICONDUCTORS AB | United States vs. Identiv |
| Universal Display vs. TROPHY GAMES DEV | Universal Display vs. Penn National Gaming | Universal Display vs. CVW CLEANTECH INC | Universal Display vs. GAMESTOP |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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