Correlation Between Universal Display and Xtant Medical

Can any of the company-specific risk be diversified away by investing in both Universal Display and Xtant Medical 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 Xtant Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Display and Xtant Medical Holdings, you can compare the effects of market volatilities on Universal Display and Xtant Medical 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 Xtant Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Xtant Medical.

Diversification Opportunities for Universal Display and Xtant Medical

0.91

Correlation Coefficient

Universal Display  Xtant Medical

Almost no diversification

The 3 months correlation between Universal and Xtant is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical Holdings 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 Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of Universal Display i.e., Universal Display and Xtant Medical go up and down completely randomly.

Pair Corralation between Universal Display and Xtant Medical

Given the investment horizon of 90 days Universal Display is expected to under-perform the Xtant Medical. But the stock apears to be less risky and, when comparing its historical volatility, Universal Display is 1.51 times less risky than Xtant Medical. The stock trades about -0.25 of its potential returns per unit of risk. The Xtant Medical Holdings is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Xtant Medical Holdings on October 4, 2024 and sell it today you would lose (19.00) from holding Xtant Medical Holdings or give up 30.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Universal Display  vs.  Xtant Medical Holdings

Universal Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Universal Display and Xtant Medical

The main advantage of trading using opposite Universal Display and Xtant Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Xtant Medical 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 Xtant Medical will offset losses from the drop in Xtant Medical's long position.

The idea behind Universal Display and Xtant Medical Holdings 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.