Correlation Between Office Properties and Universal Display
Can any of the company-specific risk be diversified away by investing in both Office 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 Office 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 Office Properties Income and Universal Display, you can compare the effects of market volatilities on Office 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 Office Properties with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Office Properties and Universal Display.
Diversification Opportunities for Office Properties and Universal Display
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Office and Universal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and Office 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 Office Properties Income 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 Office Properties i.e., Office Properties and Universal Display go up and down completely randomly.
Pair Corralation between Office Properties and Universal Display
Assuming the 90 days trading horizon Office Properties Income is expected to under-perform the Universal Display. In addition to that, Office Properties is 2.8 times more volatile than Universal Display. It trades about -0.16 of its total potential returns per unit of risk. Universal Display is currently generating about -0.25 per unit of volatility. If you would invest 18,620 in Universal Display on August 25, 2024 and sell it today you would lose (3,145) from holding Universal Display or give up 16.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Office Properties Income vs. Universal Display
Performance |
| Timeline |
| Office Properties Income |
| Universal Display |
Office Properties and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Office Properties and Universal Display
The main advantage of trading using opposite Office Properties and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Office 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.| Office Properties vs. CDN IMPERIAL BANK | Office Properties vs. Quaker Chemical | Office Properties vs. Sanyo Chemical Industries | Office Properties vs. TIANDE CHEMICAL |
| Universal Display vs. ASML HOLDING NY | Universal Display vs. Applied Materials | Universal Display vs. Lam Research | Universal Display vs. Superior Plus Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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