Correlation Between Universal Display and American Eagle
Can any of the company-specific risk be diversified away by investing in both Universal Display and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and American Eagle Outfitters, you can compare the effects of market volatilities on Universal Display and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and American Eagle.
Diversification Opportunities for Universal Display and American Eagle
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and American is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Universal Display i.e., Universal Display and American Eagle go up and down completely randomly.
Pair Corralation between Universal Display and American Eagle
Assuming the 90 days horizon Universal Display is expected to generate 1.97 times less return on investment than American Eagle. But when comparing it to its historical volatility, Universal Display is 1.09 times less risky than American Eagle. It trades about 0.03 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,150 in American Eagle Outfitters on September 12, 2024 and sell it today you would earn a total of 550.00 from holding American Eagle Outfitters or generate 47.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. American Eagle Outfitters
Performance |
| Timeline |
| Universal Display |
| American Eagle Outfitters |
Universal Display and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and American Eagle
The main advantage of trading using opposite Universal Display and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Universal Display vs. Applied Materials | Universal Display vs. Tokyo Electron Limited | Universal Display vs. Superior Plus Corp | Universal Display vs. SIVERS SEMICONDUCTORS AB |
| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Transaction History View history of all your transactions and understand their impact on performance |