Correlation Between UNIVERSAL DISPLAY and DENTSPLY SIRONA

Can any of the company-specific risk be diversified away by investing in both UNIVERSAL DISPLAY and DENTSPLY SIRONA 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 DENTSPLY SIRONA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNIVERSAL DISPLAY and DENTSPLY SIRONA, you can compare the effects of market volatilities on UNIVERSAL DISPLAY and DENTSPLY SIRONA 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 DENTSPLY SIRONA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL DISPLAY and DENTSPLY SIRONA.

Diversification Opportunities for UNIVERSAL DISPLAY and DENTSPLY SIRONA

0.83

Correlation Coefficient

UNIVERSAL DISPLAY  DENTSPLY SIRONA

Very poor diversification

The 3 months correlation between UNIVERSAL and DENTSPLY is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL DISPLAY and DENTSPLY SIRONA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENTSPLY SIRONA 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 DENTSPLY SIRONA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENTSPLY SIRONA has no effect on the direction of UNIVERSAL DISPLAY i.e., UNIVERSAL DISPLAY and DENTSPLY SIRONA go up and down completely randomly.

Pair Corralation between UNIVERSAL DISPLAY and DENTSPLY SIRONA

Assuming the 90 days trading horizon UNIVERSAL DISPLAY is expected to generate 0.84 times more return on investment than DENTSPLY SIRONA. However, UNIVERSAL DISPLAY is 1.19 times less risky than DENTSPLY SIRONA. It trades about 0.12 of its potential returns per unit of risk. DENTSPLY SIRONA is currently generating about 0.1 per unit of risk. If you would invest  10,813  in UNIVERSAL DISPLAY on April 24, 2025 and sell it today you would earn a total of  1,977  from holding UNIVERSAL DISPLAY or generate 18.28% return on investment over 90 days.

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

UNIVERSAL DISPLAY  vs.  DENTSPLY SIRONA

UNIVERSAL DISPLAY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVERSAL DISPLAY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, UNIVERSAL DISPLAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

DENTSPLY SIRONA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DENTSPLY SIRONA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DENTSPLY SIRONA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNIVERSAL DISPLAY and DENTSPLY SIRONA

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

The idea behind UNIVERSAL DISPLAY and DENTSPLY SIRONA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.