Correlation Between Ufp Industries and Conifex Timber

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

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

Diversification Opportunities for Ufp Industries and Conifex Timber

0.04

Correlation Coefficient

Ufp Industries  Conifex Timber

Significant diversification

The 3 months correlation between Ufp and Conifex is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ufp Industries and Conifex Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifex Timber 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 Conifex Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifex Timber has no effect on the direction of Ufp Industries i.e., Ufp Industries and Conifex Timber go up and down completely randomly.

Pair Corralation between Ufp Industries and Conifex Timber

Given the investment horizon of 90 days Ufp Industries is expected to generate 0.42 times more return on investment than Conifex Timber. However, Ufp Industries is 2.39 times less risky than Conifex Timber. It trades about -0.05 of its potential returns per unit of risk. Conifex Timber is currently generating about -0.15 per unit of risk. If you would invest  11,182  in Ufp Industries on December 28, 2024 and sell it today you would lose (551.00) from holding Ufp Industries or give up 4.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Ufp Industries  vs.  Conifex Timber

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 fairly strong basic indicators, Ufp Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ufp Industries and Conifex Timber

The main advantage of trading using opposite Ufp Industries and Conifex Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ufp Industries position performs unexpectedly, Conifex Timber 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 Conifex Timber will offset losses from the drop in Conifex Timber's long position.

The idea behind Ufp Industries and Conifex Timber 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .