Correlation Between TRAVEL + and Universal Display

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Can any of the company-specific risk be diversified away by investing in both TRAVEL + 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 TRAVEL + and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and Universal Display, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and Universal Display.

Diversification Opportunities for TRAVEL + and Universal Display

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between TRAVEL and Universal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and Universal Display go up and down completely randomly.

Pair Corralation between TRAVEL + and Universal Display

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 1.31 times more return on investment than Universal Display. However, TRAVEL + is 1.31 times more volatile than Universal Display. It trades about 0.38 of its potential returns per unit of risk. Universal Display is currently generating about -0.01 per unit of risk. If you would invest  4,220  in TRAVEL LEISURE DL 01 on April 22, 2025 and sell it today you would earn a total of  640.00  from holding TRAVEL LEISURE DL 01 or generate 15.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

TRAVEL LEISURE DL 01  vs.  Universal Display

 Performance 
       Timeline  
TRAVEL LEISURE DL 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.
Universal Display 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Display are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Display reported solid returns over the last few months and may actually be approaching a breakup point.

TRAVEL + and Universal Display Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TRAVEL + and Universal Display

The main advantage of trading using opposite TRAVEL + and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 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.
Check out your portfolio center.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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