Correlation Between Universal Display and Penn National
Can any of the company-specific risk be diversified away by investing in both Universal Display and Penn National 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 Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display and Penn National Gaming, you can compare the effects of market volatilities on Universal Display and Penn National 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 Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Penn National.
Diversification Opportunities for Universal Display and Penn National
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Penn is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming 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 Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of Universal Display i.e., Universal Display and Penn National go up and down completely randomly.
Pair Corralation between Universal Display and Penn National
Assuming the 90 days horizon Universal Display is expected to generate 0.75 times more return on investment than Penn National. However, Universal Display is 1.34 times less risky than Penn National. It trades about 0.03 of its potential returns per unit of risk. Penn National Gaming is currently generating about 0.01 per unit of risk. If you would invest 13,516 in Universal Display on September 1, 2024 and sell it today you would earn a total of 1,714 from holding Universal Display or generate 12.68% 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. Penn National Gaming
Performance |
| Timeline |
| Universal Display |
| Penn National Gaming |
Universal Display and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Penn National
The main advantage of trading using opposite Universal Display and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| Universal Display vs. Superior Plus Corp | Universal Display vs. NMI Holdings | Universal Display vs. Origin Agritech | Universal Display vs. SIVERS SEMICONDUCTORS AB |
| Penn National vs. WESTLAKE CHEMICAL | Penn National vs. Marie Brizard Wine | Penn National vs. NorAm Drilling AS | Penn National vs. SEKISUI CHEMICAL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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