Correlation Between Trupanion and Universal Display

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

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

Diversification Opportunities for Trupanion and Universal Display

0.29

Correlation Coefficient

Trupanion  Universal Display

Modest diversification

The 3 months correlation between Trupanion and Universal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Trupanion 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 Trupanion 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 Trupanion i.e., Trupanion and Universal Display go up and down completely randomly.

Pair Corralation between Trupanion and Universal Display

Given the investment horizon of 90 days Trupanion is expected to under-perform the Universal Display. In addition to that, Trupanion is 2.09 times more volatile than Universal Display. It trades about -0.14 of its total potential returns per unit of risk. Universal Display is currently generating about -0.05 per unit of volatility. If you would invest  16,519  in Universal Display on December 1, 2024 and sell it today you would lose (1,157) from holding Universal Display or give up 7.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Trupanion  vs.  Universal Display

Trupanion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trupanion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Trupanion and Universal Display

The main advantage of trading using opposite Trupanion and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trupanion 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 Trupanion 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.