Correlation Between Universal Electronics and Vizio Holding

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

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

Diversification Opportunities for Universal Electronics and Vizio Holding

-0.1

Correlation Coefficient

Universal Electronics  Vizio Holding

Good diversification

The 3 months correlation between Universal and Vizio is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Universal Electronics and Vizio Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vizio Holding Corp 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 Vizio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vizio Holding Corp has no effect on the direction of Universal Electronics i.e., Universal Electronics and Vizio Holding go up and down completely randomly.

Pair Corralation between Universal Electronics and Vizio Holding

Given the investment horizon of 90 days Universal Electronics is expected to generate 12.03 times more return on investment than Vizio Holding. However, Universal Electronics is 12.03 times more volatile than Vizio Holding Corp. It trades about 0.08 of its potential returns per unit of risk. Vizio Holding Corp is currently generating about 0.06 per unit of risk. If you would invest  909.00  in Universal Electronics on August 14, 2024 and sell it today you would earn a total of  189.00  from holding Universal Electronics or generate 20.79% return on investment over 90 days.

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

Universal Electronics  vs.  Vizio Holding Corp

Universal Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward indicators, Universal Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vizio Holding Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vizio Holding Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Vizio Holding is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Universal Electronics and Vizio Holding

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

The idea behind Universal Electronics and Vizio Holding Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.