Correlation Between Universal Display and Harley Davidson
Can any of the company-specific risk be diversified away by investing in both Universal Display and Harley Davidson 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 Harley Davidson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Harley Davidson, you can compare the effects of market volatilities on Universal Display and Harley Davidson 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 Harley Davidson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Harley Davidson.
Diversification Opportunities for Universal Display and Harley Davidson
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Harley is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson 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 Harley Davidson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harley Davidson has no effect on the direction of Universal Display i.e., Universal Display and Harley Davidson go up and down completely randomly.
Pair Corralation between Universal Display and Harley Davidson
Assuming the 90 days horizon Universal Display is expected to generate 0.58 times more return on investment than Harley Davidson. However, Universal Display is 1.73 times less risky than Harley Davidson. It trades about -0.04 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.18 per unit of risk. If you would invest 14,310 in Universal Display on October 31, 2024 and sell it today you would lose (135.00) from holding Universal Display or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Harley Davidson
Performance |
| Timeline |
| Universal Display |
| Harley Davidson |
Universal Display and Harley Davidson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Harley Davidson
The main advantage of trading using opposite Universal Display and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Harley Davidson 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 Harley Davidson will offset losses from the drop in Harley Davidson's long position.| Universal Display vs. Jacquet Metal Service | Universal Display vs. Yuexiu Transport Infrastructure | Universal Display vs. Fortescue Metals Group | Universal Display vs. SWISS WATER DECAFFCOFFEE |
| Harley Davidson vs. Check Point Software | Harley Davidson vs. CyberArk Software | Harley Davidson vs. SEI INVESTMENTS | Harley Davidson vs. Beta Systems Software |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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