Correlation Between Ufp Industries and Stella Jones
Can any of the company-specific risk be diversified away by investing in both Ufp Industries and Stella 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 Stella 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 Stella Jones, you can compare the effects of market volatilities on Ufp Industries and Stella 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 Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ufp Industries and Stella Jones.
Diversification Opportunities for Ufp Industries and Stella Jones
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ufp and Stella is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ufp Industries and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Ufp Industries i.e., Ufp Industries and Stella Jones go up and down completely randomly.
Pair Corralation between Ufp Industries and Stella Jones
Given the investment horizon of 90 days Ufp Industries is expected to generate 0.91 times more return on investment than Stella Jones. However, Ufp Industries is 1.1 times less risky than Stella Jones. It trades about 0.06 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 per unit of risk. If you would invest 7,991 in Ufp Industries on August 24, 2024 and sell it today you would earn a total of 5,316 from holding Ufp Industries or generate 66.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.27% |
| Values | Daily Returns |
Ufp Industries vs. Stella Jones
Performance |
| Timeline |
| Ufp Industries |
| Stella Jones |
Ufp Industries and Stella Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ufp Industries and Stella Jones
The main advantage of trading using opposite Ufp Industries and Stella Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ufp Industries position performs unexpectedly, Stella 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 Stella Jones will offset losses from the drop in Stella Jones' long position.| Ufp Industries vs. West Fraser Timber | Ufp Industries vs. Canfor | Ufp Industries vs. Stella Jones | Ufp Industries vs. Simpson Manufacturing |
| Stella Jones vs. Canfor | Stella Jones vs. West Fraser Timber | Stella Jones vs. Interfor | Stella Jones vs. Svenska Cellulosa Aktiebolaget |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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