Correlation Between UFP Industries and Dow Jones
Can any of the company-specific risk be diversified away by investing in both UFP Industries and Dow Jones 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 UFP Industries and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UFP Industries and Dow Jones Industrial, you can compare the effects of market volatilities on UFP Industries and Dow Jones 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 UFP Industries with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of UFP Industries and Dow Jones.
Diversification Opportunities for UFP Industries and Dow Jones
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UFP and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding UFP Industries and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and UFP Industries 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 UFP Industries are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of UFP Industries i.e., UFP Industries and Dow Jones go up and down completely randomly.
Pair Corralation between UFP Industries and Dow Jones
Assuming the 90 days horizon UFP Industries is expected to generate 2.77 times more return on investment than Dow Jones. However, UFP Industries is 2.77 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 7,538 in UFP Industries on August 27, 2024 and sell it today you would earn a total of 4,822 from holding UFP Industries or generate 63.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
UFP Industries vs. Dow Jones Industrial
Performance |
| Timeline |
UFP Industries and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
UFP Industries
Pair trading matchups for UFP Industries
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with UFP Industries and Dow Jones
The main advantage of trading using opposite UFP Industries and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UFP Industries position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| UFP Industries vs. Superior Plus Corp | UFP Industries vs. Origin Agritech | UFP Industries vs. Identiv | UFP Industries vs. INTUITIVE SURGICAL |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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