Correlation Between BANK HANDLOWY and UFP Industries
Can any of the company-specific risk be diversified away by investing in both BANK HANDLOWY and UFP Industries 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 BANK HANDLOWY and UFP Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK HANDLOWY and UFP Industries, you can compare the effects of market volatilities on BANK HANDLOWY and UFP Industries 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 BANK HANDLOWY with a short position of UFP Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK HANDLOWY and UFP Industries.
Diversification Opportunities for BANK HANDLOWY and UFP Industries
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and UFP is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and UFP Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Industries and BANK HANDLOWY 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 BANK HANDLOWY are associated (or correlated) with UFP Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFP Industries has no effect on the direction of BANK HANDLOWY i.e., BANK HANDLOWY and UFP Industries go up and down completely randomly.
Pair Corralation between BANK HANDLOWY and UFP Industries
Assuming the 90 days trading horizon BANK HANDLOWY is expected to generate 1.74 times more return on investment than UFP Industries. However, BANK HANDLOWY is 1.74 times more volatile than UFP Industries. It trades about 0.07 of its potential returns per unit of risk. UFP Industries is currently generating about 0.06 per unit of risk. If you would invest 1,104 in BANK HANDLOWY on September 12, 2024 and sell it today you would earn a total of 1,036 from holding BANK HANDLOWY or generate 93.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK HANDLOWY vs. UFP Industries
Performance |
| Timeline |
| BANK HANDLOWY |
| UFP Industries |
BANK HANDLOWY and UFP Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK HANDLOWY and UFP Industries
The main advantage of trading using opposite BANK HANDLOWY and UFP Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY position performs unexpectedly, UFP Industries 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 UFP Industries will offset losses from the drop in UFP Industries' long position.| BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc | BANK HANDLOWY vs. Apple Inc |
| UFP Industries vs. Superior Plus Corp | UFP Industries vs. SIVERS SEMICONDUCTORS AB | UFP Industries vs. NorAm Drilling AS | UFP Industries vs. Norsk Hydro ASA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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