Correlation Between Universal Display and Schlumberger
Can any of the company-specific risk be diversified away by investing in both Universal Display and Schlumberger 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 Schlumberger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Schlumberger Limited, you can compare the effects of market volatilities on Universal Display and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Schlumberger.
Diversification Opportunities for Universal Display and Schlumberger
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Schlumberger is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Universal Display i.e., Universal Display and Schlumberger go up and down completely randomly.
Pair Corralation between Universal Display and Schlumberger
Assuming the 90 days horizon Universal Display is expected to generate 1.44 times more return on investment than Schlumberger. However, Universal Display is 1.44 times more volatile than Schlumberger Limited. It trades about 0.01 of its potential returns per unit of risk. Schlumberger Limited is currently generating about -0.03 per unit of risk. If you would invest 14,706 in Universal Display on September 14, 2024 and sell it today you would earn a total of 14.00 from holding Universal Display or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Schlumberger Limited
Performance |
| Timeline |
| Universal Display |
| Schlumberger Limited |
Universal Display and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Schlumberger
The main advantage of trading using opposite Universal Display and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger'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 |
| Schlumberger vs. AVITA Medical | Schlumberger vs. InPlay Oil Corp | Schlumberger vs. Universal Display | Schlumberger vs. MeVis Medical Solutions |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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