Correlation Between Medical Properties and Universal Display
Can any of the company-specific risk be diversified away by investing in both Medical Properties 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 Medical Properties and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust and Universal Display Corp, you can compare the effects of market volatilities on Medical Properties 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 Medical Properties with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Universal Display.
Diversification Opportunities for Medical Properties and Universal Display
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Medical and Universal is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp and Medical Properties 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 Medical Properties Trust 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 Corp has no effect on the direction of Medical Properties i.e., Medical Properties and Universal Display go up and down completely randomly.
Pair Corralation between Medical Properties and Universal Display
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 1.37 times more return on investment than Universal Display. However, Medical Properties is 1.37 times more volatile than Universal Display Corp. It trades about 0.01 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.04 per unit of risk. If you would invest 449.00 in Medical Properties Trust on September 2, 2024 and sell it today you would lose (15.00) from holding Medical Properties Trust or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Medical Properties Trust vs. Universal Display Corp
Performance |
| Timeline |
| Medical Properties Trust |
| Universal Display Corp |
Medical Properties and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Universal Display
The main advantage of trading using opposite Medical Properties and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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.| Medical Properties vs. Uniper SE | Medical Properties vs. Mulberry Group PLC | Medical Properties vs. London Security Plc | Medical Properties vs. Triad Group PLC |
| Universal Display vs. Air Products Chemicals | Universal Display vs. Applied Materials | Universal Display vs. Lindsell Train Investment | Universal Display vs. Broadridge Financial Solutions |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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