Correlation Between Universal Display and Amazon
Can any of the company-specific risk be diversified away by investing in both Universal Display and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display Corp and Amazon Inc, you can compare the effects of market volatilities on Universal Display and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Amazon.
Diversification Opportunities for Universal Display and Amazon
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Amazon is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Corp are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Universal Display i.e., Universal Display and Amazon go up and down completely randomly.
Pair Corralation between Universal Display and Amazon
Assuming the 90 days trading horizon Universal Display is expected to generate 2.59 times less return on investment than Amazon. In addition to that, Universal Display is 1.3 times more volatile than Amazon Inc. It trades about 0.03 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.09 per unit of volatility. If you would invest 9,596 in Amazon Inc on October 4, 2024 and sell it today you would earn a total of 12,704 from holding Amazon Inc or generate 132.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 84.34% |
Values | Daily Returns |
Universal Display Corp vs. Amazon Inc
Performance |
Timeline |
Universal Display Corp |
Amazon Inc |
Universal Display and Amazon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Universal Display and Amazon
The main advantage of trading using opposite Universal Display and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.Universal Display vs. Weiss Korea Opportunity | Universal Display vs. River and Mercantile | Universal Display vs. SANTANDER UK 10 | Universal Display vs. Coor Service Management |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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