Correlation Between VOXX International and Universal Electronics

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

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

Diversification Opportunities for VOXX International and Universal Electronics

0.25

Correlation Coefficient

VOXX International  Universal Electronics

Modest diversification

The 3 months correlation between VOXX and Universal is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and VOXX International 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 VOXX International are associated (or correlated) with Universal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Electronics has no effect on the direction of VOXX International i.e., VOXX International and Universal Electronics go up and down completely randomly.

Pair Corralation between VOXX International and Universal Electronics

Given the investment horizon of 90 days VOXX International is expected to generate 1.34 times more return on investment than Universal Electronics. However, VOXX International is 1.34 times more volatile than Universal Electronics. It trades about 0.02 of its potential returns per unit of risk. Universal Electronics is currently generating about -0.01 per unit of risk. If you would invest  833.00  in VOXX International on September 19, 2024 and sell it today you would lose (101.50) from holding VOXX International or give up 12.18% of portfolio value over 90 days.

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

VOXX International  vs.  Universal Electronics

VOXX International

Risk-Adjusted Performance

6 of 100

Modest

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

Universal Electronics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 7 (%) 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.

Pair Trading with VOXX International and Universal Electronics

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

The idea behind VOXX International and Universal Electronics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.