Correlation Between Capital Clean and LB Foster
Can any of the company-specific risk be diversified away by investing in both Capital Clean 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 Capital Clean and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Clean Energy and LB Foster, you can compare the effects of market volatilities on Capital Clean 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 Capital Clean with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Clean and LB Foster.
Diversification Opportunities for Capital Clean and LB Foster
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capital and FSTR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Capital Clean 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 Capital Clean Energy 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 Capital Clean i.e., Capital Clean and LB Foster go up and down completely randomly.
Pair Corralation between Capital Clean and LB Foster
Given the investment horizon of 90 days Capital Clean Energy is expected to under-perform the LB Foster. But the stock apears to be less risky and, when comparing its historical volatility, Capital Clean Energy is 2.7 times less risky than LB Foster. The stock trades about -0.06 of its potential returns per unit of risk. The LB Foster is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,980 in LB Foster on August 29, 2024 and sell it today you would earn a total of 852.00 from holding LB Foster or generate 43.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Clean Energy vs. LB Foster
Performance |
| Timeline |
| Capital Clean Energy |
| LB Foster |
Capital Clean and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Clean and LB Foster
The main advantage of trading using opposite Capital Clean and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Clean 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.| Capital Clean vs. RadNet Inc | Capital Clean vs. MACOM Technology Solutions | Capital Clean vs. Elmos Semiconductor SE | Capital Clean vs. Lipocine |
| LB Foster vs. Trinity Industries | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern | LB Foster vs. Greenbrier Companies |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |