Correlation Between Universal Display and AutoZone
Can any of the company-specific risk be diversified away by investing in both Universal Display and AutoZone 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 AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and AutoZone, you can compare the effects of market volatilities on Universal Display and AutoZone 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 AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and AutoZone.
Diversification Opportunities for Universal Display and AutoZone
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and AutoZone is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone 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 AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Universal Display i.e., Universal Display and AutoZone go up and down completely randomly.
Pair Corralation between Universal Display and AutoZone
Assuming the 90 days horizon Universal Display is expected to under-perform the AutoZone. In addition to that, Universal Display is 2.35 times more volatile than AutoZone. It trades about -0.01 of its total potential returns per unit of risk. AutoZone is currently generating about 0.42 per unit of volatility. If you would invest 292,400 in AutoZone on September 19, 2024 and sell it today you would earn a total of 23,500 from holding AutoZone or generate 8.04% 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. AutoZone
Performance |
| Timeline |
| Universal Display |
| AutoZone |
Universal Display and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and AutoZone
The main advantage of trading using opposite Universal Display and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone'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 |
| AutoZone vs. COMPUTERSHARE | AutoZone vs. Verizon Communications | AutoZone vs. Consolidated Communications Holdings | AutoZone vs. Universal Display |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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