Correlation Between Allstate and UFP Industries

Can any of the company-specific risk be diversified away by investing in both Allstate 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 Allstate and UFP Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Allstate and UFP Industries, you can compare the effects of market volatilities on Allstate 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 Allstate with a short position of UFP Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and UFP Industries.

Diversification Opportunities for Allstate and UFP Industries

0.0

Correlation Coefficient

Allstate  UFP Industries

Pay attention - limited upside

The 3 months correlation between Allstate and UFP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and UFP Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Industries and Allstate 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 The Allstate 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 Allstate i.e., Allstate and UFP Industries go up and down completely randomly.

Pair Corralation between Allstate and UFP Industries

If you would invest (100.00) in The Allstate on October 12, 2024 and sell it today you would earn a total of  100.00  from holding The Allstate or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

The Allstate  vs.  UFP Industries

Allstate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Allstate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Allstate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UFP Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UFP Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Allstate and UFP Industries

The main advantage of trading using opposite Allstate and UFP Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate 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.

The idea behind The Allstate and UFP Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.