Correlation Between Visa and UFP Industries
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and UFP Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and UFP Industries, you can compare the effects of market volatilities on Visa 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 Visa with a short position of UFP Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and UFP Industries.
Diversification Opportunities for Visa and UFP Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and UFP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and UFP Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Industries and Visa 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 Visa Class A 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 Visa i.e., Visa and UFP Industries go up and down completely randomly.
Pair Corralation between Visa and UFP Industries
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than UFP Industries. However, Visa Class A is 1.92 times less risky than UFP Industries. It trades about 0.25 of its potential returns per unit of risk. UFP Industries is currently generating about -0.09 per unit of risk. If you would invest 28,268 in Visa Class A on September 24, 2024 and sell it today you would earn a total of 3,503 from holding Visa Class A or generate 12.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.67% |
Values | Daily Returns |
Visa Class A vs. UFP Industries
Performance |
Timeline |
Visa Class A |
UFP Industries |
Visa and UFP Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and UFP Industries
The main advantage of trading using opposite Visa and UFP Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.Visa vs. American Express | Visa vs. Upstart Holdings | Visa vs. Capital One Financial | Visa vs. Ally Financial |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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