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

-0.44

Correlation Coefficient

Medical Properties  Universal Display

Very good diversification

The 3 months correlation between Medical and Universal is -0.44. 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 1.35 times more return on investment than Universal Display. However, Medical Properties is 1.35 times more volatile than Universal Display Corp. It trades about 0.07 of its potential returns per unit of risk. Universal Display Corp is currently generating about 0.01 per unit of risk. If you would invest  431.00  in Medical Properties Trust on November 29, 2024 and sell it today you would earn a total of  45.00  from holding Medical Properties Trust or generate 10.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Medical Properties Trust  vs.  Universal Display Corp

Medical Properties Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Medical Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Universal Display Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Display Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Universal Display is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

The idea behind Medical Properties Trust and Universal Display Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.