Correlation Between Ufp Industries and Simpson Manufacturing
Can any of the company-specific risk be diversified away by investing in both Ufp Industries and Simpson Manufacturing 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 Simpson Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ufp Industries and Simpson Manufacturing, you can compare the effects of market volatilities on Ufp Industries and Simpson Manufacturing 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 Simpson Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ufp Industries and Simpson Manufacturing.
Diversification Opportunities for Ufp Industries and Simpson Manufacturing
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ufp and Simpson is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ufp Industries and Simpson Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simpson Manufacturing 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 Simpson Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simpson Manufacturing has no effect on the direction of Ufp Industries i.e., Ufp Industries and Simpson Manufacturing go up and down completely randomly.
Pair Corralation between Ufp Industries and Simpson Manufacturing
Given the investment horizon of 90 days Ufp Industries is expected to generate 1.3 times less return on investment than Simpson Manufacturing. In addition to that, Ufp Industries is 1.04 times more volatile than Simpson Manufacturing. It trades about 0.07 of its total potential returns per unit of risk. Simpson Manufacturing is currently generating about 0.09 per unit of volatility. If you would invest 9,111 in Simpson Manufacturing on August 28, 2024 and sell it today you would earn a total of 10,582 from holding Simpson Manufacturing or generate 116.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ufp Industries vs. Simpson Manufacturing
Performance |
| Timeline |
| Ufp Industries |
| Simpson Manufacturing |
Ufp Industries and Simpson Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ufp Industries and Simpson Manufacturing
The main advantage of trading using opposite Ufp Industries and Simpson Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ufp Industries position performs unexpectedly, Simpson Manufacturing 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 Simpson Manufacturing will offset losses from the drop in Simpson Manufacturing's long position.| Ufp Industries vs. West Fraser Timber | Ufp Industries vs. Canfor | Ufp Industries vs. Stella Jones | Ufp Industries vs. Simpson Manufacturing |
| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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