Correlation Between Western Forest and Ufp Industries
Can any of the company-specific risk be diversified away by investing in both Western Forest 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 Western Forest and Ufp Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Forest Products and Ufp Industries, you can compare the effects of market volatilities on Western Forest 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 Western Forest with a short position of Ufp Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Forest and Ufp Industries.
Diversification Opportunities for Western Forest and Ufp Industries
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Ufp is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Western Forest Products and Ufp Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ufp Industries and Western Forest 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 Western Forest Products 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 Western Forest i.e., Western Forest and Ufp Industries go up and down completely randomly.
Pair Corralation between Western Forest and Ufp Industries
Assuming the 90 days horizon Western Forest Products is expected to under-perform the Ufp Industries. In addition to that, Western Forest is 1.22 times more volatile than Ufp Industries. It trades about -0.06 of its total potential returns per unit of risk. Ufp Industries is currently generating about 0.07 per unit of volatility. If you would invest 7,898 in Ufp Industries on August 28, 2024 and sell it today you would earn a total of 6,004 from holding Ufp Industries or generate 76.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.55% |
| Values | Daily Returns |
Western Forest Products vs. Ufp Industries
Performance |
| Timeline |
| Western Forest Products |
| Ufp Industries |
Western Forest and Ufp Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Forest and Ufp Industries
The main advantage of trading using opposite Western Forest and Ufp Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Forest 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.| Western Forest vs. Interfor | Western Forest vs. Svenska Cellulosa Aktiebolaget | Western Forest vs. Stella Jones | Western Forest vs. Simpson Manufacturing |
| Ufp Industries vs. West Fraser Timber | Ufp Industries vs. Canfor | Ufp Industries vs. Stella Jones | Ufp Industries vs. Simpson Manufacturing |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |