Correlation Between Ufp Industries and National Storm

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

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

Diversification Opportunities for Ufp Industries and National Storm

0.43

Correlation Coefficient

Ufp Industries  National Storm

Very weak diversification

The 3 months correlation between Ufp and National is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ufp Industries and National Storm Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storm Recovery 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 National Storm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storm Recovery has no effect on the direction of Ufp Industries i.e., Ufp Industries and National Storm go up and down completely randomly.

Pair Corralation between Ufp Industries and National Storm

Given the investment horizon of 90 days Ufp Industries is not expected to generate positive returns. However, Ufp Industries is 9.26 times less risky than National Storm. It waists most of its returns potential to compensate for thr risk taken. National Storm is generating about 0.06 per unit of risk. If you would invest  44.00  in National Storm Recovery on October 7, 2024 and sell it today you would lose (14.00) from holding National Storm Recovery or give up 31.82% of portfolio value over 90 days.

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

Ufp Industries  vs.  National Storm Recovery

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

National Storm Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storm Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ufp Industries and National Storm

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

The idea behind Ufp Industries and National Storm Recovery 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.