Correlation Between Brunswick and LB Foster
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and LB Foster, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and LB Foster.
Diversification Opportunities for Brunswick and LB Foster
Average diversification
The 3 months correlation between Brunswick and FSTR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and LB Foster go up and down completely randomly.
Pair Corralation between Brunswick and LB Foster
Allowing for the 90-day total investment horizon Brunswick is expected to generate 2.24 times less return on investment than LB Foster. But when comparing it to its historical volatility, Brunswick is 1.4 times less risky than LB Foster. It trades about 0.03 of its potential returns per unit of risk. LB Foster is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,115 in LB Foster on September 1, 2024 and sell it today you would earn a total of 758.00 from holding LB Foster or generate 35.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. LB Foster
Performance |
| Timeline |
| Brunswick |
| LB Foster |
Brunswick and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and LB Foster
The main advantage of trading using opposite Brunswick and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.| Brunswick vs. LCI Industries | Brunswick vs. MCBC Holdings | Brunswick vs. Winnebago Industries | Brunswick vs. Thor Industries |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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