Correlation Between Conifex Timber and Ufp Industries

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

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

Diversification Opportunities for Conifex Timber and Ufp Industries

0.64

Correlation Coefficient

Conifex Timber  Ufp Industries

Poor diversification

The 3 months correlation between Conifex and Ufp is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Conifex Timber and Ufp Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ufp Industries and Conifex Timber 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 Conifex Timber 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 Conifex Timber i.e., Conifex Timber and Ufp Industries go up and down completely randomly.

Pair Corralation between Conifex Timber and Ufp Industries

Assuming the 90 days horizon Conifex Timber is expected to generate 0.62 times more return on investment than Ufp Industries. However, Conifex Timber is 1.61 times less risky than Ufp Industries. It trades about -0.21 of its potential returns per unit of risk. Ufp Industries is currently generating about -0.25 per unit of risk. If you would invest  22.00  in Conifex Timber on November 28, 2024 and sell it today you would lose (1.00) from holding Conifex Timber or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Conifex Timber  vs.  Ufp Industries

Conifex Timber

Risk-Adjusted Performance

Very Weak

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

Ufp Industries

Risk-Adjusted Performance

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 fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Conifex Timber and Ufp Industries

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

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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 Stocks Directory module to find actively traded stocks across global markets.