Correlation Between National Health and Universal Display
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Universal Display, you can compare the effects of market volatilities on National Health 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 National Health with a short position of Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Universal Display.
Diversification Opportunities for National Health and Universal Display
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Universal is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display and National Health 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 National Health Investors 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 National Health i.e., National Health and Universal Display go up and down completely randomly.
Pair Corralation between National Health and Universal Display
Assuming the 90 days trading horizon National Health Investors is expected to generate 0.82 times more return on investment than Universal Display. However, National Health Investors is 1.22 times less risky than Universal Display. It trades about 0.12 of its potential returns per unit of risk. Universal Display is currently generating about -0.18 per unit of risk. If you would invest 6,900 in National Health Investors on August 28, 2024 and sell it today you would earn a total of 450.00 from holding National Health Investors or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Universal Display
Performance |
| Timeline |
| National Health Investors |
| Universal Display |
National Health and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Universal Display
The main advantage of trading using opposite National Health and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Universal Display vs. ASML HOLDING NY | Universal Display vs. Applied Materials | Universal Display vs. Superior Plus Corp | Universal Display vs. NMI Holdings |
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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