Correlation Between Universal Display and Sun Communities

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

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

Diversification Opportunities for Universal Display and Sun Communities

0.32

Correlation Coefficient

Universal Display  Sun Communities

Weak diversification

The 3 months correlation between Universal and Sun is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities 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 Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of Universal Display i.e., Universal Display and Sun Communities go up and down completely randomly.

Pair Corralation between Universal Display and Sun Communities

Assuming the 90 days horizon Universal Display is expected to generate 1.51 times more return on investment than Sun Communities. However, Universal Display is 1.51 times more volatile than Sun Communities. It trades about 0.03 of its potential returns per unit of risk. Sun Communities is currently generating about 0.0 per unit of risk. If you would invest  11,559  in Universal Display on October 13, 2024 and sell it today you would earn a total of  3,111  from holding Universal Display or generate 26.91% return on investment over 90 days.

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

Universal Display  vs.  Sun Communities

Universal Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sun Communities

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Communities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sun Communities is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Universal Display and Sun Communities

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

The idea behind Universal Display and Sun Communities 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..