Correlation Between Universal Display and AutoNation

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

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

Diversification Opportunities for Universal Display and AutoNation

-0.41

Correlation Coefficient

Universal Display  AutoNation

Very good diversification

The 3 months correlation between Universal and AutoNation is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Universal Display i.e., Universal Display and AutoNation go up and down completely randomly.

Pair Corralation between Universal Display and AutoNation

Assuming the 90 days horizon Universal Display is expected to generate 1.35 times more return on investment than AutoNation. However, Universal Display is 1.35 times more volatile than AutoNation. It trades about 0.13 of its potential returns per unit of risk. AutoNation is currently generating about -0.05 per unit of risk. If you would invest  12,030  in Universal Display on July 22, 2025 and sell it today you would earn a total of  700.00  from holding Universal Display or generate 5.82% return on investment over 90 days.

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

Universal Display  vs.  AutoNation

Universal Display

Risk-Adjusted Performance

Weakest

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Universal Display is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AutoNation

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in AutoNation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoNation may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Universal Display and AutoNation

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

The idea behind Universal Display and AutoNation 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.