Correlation Between Benchmark Electronics and Universal Display

Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Universal Display 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 Benchmark Electronics and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Benchmark Electronics and Universal Display, you can compare the effects of market volatilities on Benchmark Electronics and Universal Display 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 Benchmark Electronics with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Universal Display.

Diversification Opportunities for Benchmark Electronics and Universal Display

-0.18

Correlation Coefficient

Benchmark Electronics  Universal Display

Good diversification

The 3 months correlation between Benchmark and Universal is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Universal Display go up and down completely randomly.

Pair Corralation between Benchmark Electronics and Universal Display

Considering the 90-day investment horizon Benchmark Electronics is expected to under-perform the Universal Display. But the stock apears to be less risky and, when comparing its historical volatility, Benchmark Electronics is 1.19 times less risky than Universal Display. The stock trades about -0.12 of its potential returns per unit of risk. The Universal Display is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14,708  in Universal Display on December 30, 2024 and sell it today you would lose (191.00) from holding Universal Display or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Benchmark Electronics  vs.  Universal Display

Benchmark Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Universal Display

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Universal Display is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Benchmark Electronics and Universal Display

The main advantage of trading using opposite Benchmark Electronics and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.

The idea behind Benchmark Electronics and Universal Display pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.