Correlation Between Universal Electronics and Retail Estates

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

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

Diversification Opportunities for Universal Electronics and Retail Estates

0.62

Correlation Coefficient

Universal Electronics  Retail Estates

Poor diversification

The 3 months correlation between Universal and Retail is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV and Universal 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 Universal Electronics are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Universal Electronics i.e., Universal Electronics and Retail Estates go up and down completely randomly.

Pair Corralation between Universal Electronics and Retail Estates

Assuming the 90 days horizon Universal Electronics is expected to generate 4.37 times more return on investment than Retail Estates. However, Universal Electronics is 4.37 times more volatile than Retail Estates NV. It trades about 0.13 of its potential returns per unit of risk. Retail Estates NV is currently generating about 0.16 per unit of risk. If you would invest  404.00  in Universal Electronics on April 20, 2025 and sell it today you would earn a total of  146.00  from holding Universal Electronics or generate 36.14% return on investment over 90 days.

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

Universal Electronics  vs.  Retail Estates NV

Universal Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Universal Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Retail Estates NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Retail Estates may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Universal Electronics and Retail Estates

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

The idea behind Universal Electronics and Retail Estates NV 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.