Correlation Between UPM-Kymmene Oyj and Sylvamo Corp
Can any of the company-specific risk be diversified away by investing in both UPM-Kymmene Oyj and Sylvamo Corp 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 UPM-Kymmene Oyj and Sylvamo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPM Kymmene Oyj and Sylvamo Corp, you can compare the effects of market volatilities on UPM-Kymmene Oyj and Sylvamo Corp 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 UPM-Kymmene Oyj with a short position of Sylvamo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM-Kymmene Oyj and Sylvamo Corp.
Diversification Opportunities for UPM-Kymmene Oyj and Sylvamo Corp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UPM-Kymmene and Sylvamo is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Sylvamo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sylvamo Corp and UPM-Kymmene Oyj 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 UPM Kymmene Oyj are associated (or correlated) with Sylvamo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sylvamo Corp has no effect on the direction of UPM-Kymmene Oyj i.e., UPM-Kymmene Oyj and Sylvamo Corp go up and down completely randomly.
Pair Corralation between UPM-Kymmene Oyj and Sylvamo Corp
Assuming the 90 days horizon UPM Kymmene Oyj is expected to under-perform the Sylvamo Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.98 times less risky than Sylvamo Corp. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Sylvamo Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,698 in Sylvamo Corp on August 25, 2024 and sell it today you would earn a total of 392.00 from holding Sylvamo Corp or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Sylvamo Corp
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Sylvamo Corp |
UPM-Kymmene Oyj and Sylvamo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM-Kymmene Oyj and Sylvamo Corp
The main advantage of trading using opposite UPM-Kymmene Oyj and Sylvamo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM-Kymmene Oyj position performs unexpectedly, Sylvamo Corp 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 Sylvamo Corp will offset losses from the drop in Sylvamo Corp's long position.| UPM-Kymmene Oyj vs. Mercer International | UPM-Kymmene Oyj vs. Sylvamo Corp | UPM-Kymmene Oyj vs. Suzano Papel e | UPM-Kymmene Oyj vs. Clearwater Paper |
| Sylvamo Corp vs. Mercer International | Sylvamo Corp vs. Suzano Papel e | Sylvamo Corp vs. UPM Kymmene Oyj | Sylvamo Corp vs. Clearwater Paper |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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