Correlation Between AerSale Corp and LB Foster
Can any of the company-specific risk be diversified away by investing in both AerSale Corp and LB Foster 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 AerSale Corp and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AerSale Corp and LB Foster, you can compare the effects of market volatilities on AerSale Corp and LB Foster 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 AerSale Corp with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and LB Foster.
Diversification Opportunities for AerSale Corp and LB Foster
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AerSale and FSTR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and AerSale Corp 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 AerSale Corp are associated (or correlated) with LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of AerSale Corp i.e., AerSale Corp and LB Foster go up and down completely randomly.
Pair Corralation between AerSale Corp and LB Foster
Given the investment horizon of 90 days AerSale Corp is expected to under-perform the LB Foster. In addition to that, AerSale Corp is 1.17 times more volatile than LB Foster. It trades about -0.04 of its total potential returns per unit of risk. LB Foster is currently generating about 0.1 per unit of volatility. If you would invest 915.00 in LB Foster on August 28, 2024 and sell it today you would earn a total of 1,913 from holding LB Foster or generate 209.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AerSale Corp vs. LB Foster
Performance |
| Timeline |
| AerSale Corp |
| LB Foster |
AerSale Corp and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerSale Corp and LB Foster
The main advantage of trading using opposite AerSale Corp and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerSale Corp position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.| AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Corporacion America Airports | AerSale Corp vs. Aeroports de Paris |
| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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