Correlation Between Universal Display and Postal Realty
Can any of the company-specific risk be diversified away by investing in both Universal Display and Postal Realty 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 Postal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Postal Realty Trust, you can compare the effects of market volatilities on Universal Display and Postal Realty 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 Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Postal Realty.
Diversification Opportunities for Universal Display and Postal Realty
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Postal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Universal Display i.e., Universal Display and Postal Realty go up and down completely randomly.
Pair Corralation between Universal Display and Postal Realty
Given the investment horizon of 90 days Universal Display is expected to generate 2.1 times more return on investment than Postal Realty. However, Universal Display is 2.1 times more volatile than Postal Realty Trust. It trades about 0.04 of its potential returns per unit of risk. Postal Realty Trust is currently generating about 0.02 per unit of risk. If you would invest 11,336 in Universal Display on August 30, 2024 and sell it today you would earn a total of 4,781 from holding Universal Display or generate 42.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display vs. Postal Realty Trust
Performance |
| Timeline |
| Universal Display |
| Postal Realty Trust |
Universal Display and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Postal Realty
The main advantage of trading using opposite Universal Display and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| Universal Display vs. Plexus Corp | Universal Display vs. Methode Electronics | Universal Display vs. Benchmark Electronics | Universal Display vs. Bel Fuse A |
| Postal Realty vs. Office Properties Income | Postal Realty vs. SL Green Realty | Postal Realty vs. Highwoods Properties | Postal Realty vs. Equity Commonwealth |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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