Correlation Between Universal Display and Assurant

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

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

Diversification Opportunities for Universal Display and Assurant

-0.83

Correlation Coefficient

Universal Display  Assurant

Pay attention - limited upside

The 3 months correlation between Universal and Assurant is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Universal Display i.e., Universal Display and Assurant go up and down completely randomly.

Pair Corralation between Universal Display and Assurant

Given the investment horizon of 90 days Universal Display is expected to under-perform the Assurant. In addition to that, Universal Display is 1.53 times more volatile than Assurant. It trades about -0.22 of its total potential returns per unit of risk. Assurant is currently generating about 0.09 per unit of volatility. If you would invest  19,815  in Assurant on September 30, 2024 and sell it today you would earn a total of  1,690  from holding Assurant or generate 8.53% return on investment over 90 days.

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

Universal Display  vs.  Assurant

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. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Assurant

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Universal Display and Assurant

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

The idea behind Universal Display and Assurant 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.