Correlation Between ClearOne and LB Foster
Can any of the company-specific risk be diversified away by investing in both ClearOne 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 ClearOne and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClearOne and LB Foster, you can compare the effects of market volatilities on ClearOne 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 ClearOne with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearOne and LB Foster.
Diversification Opportunities for ClearOne and LB Foster
Excellent diversification
The 3 months correlation between ClearOne and FSTR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ClearOne and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and ClearOne 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 ClearOne 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 ClearOne i.e., ClearOne and LB Foster go up and down completely randomly.
Pair Corralation between ClearOne and LB Foster
Given the investment horizon of 90 days ClearOne is expected to generate 2.9 times more return on investment than LB Foster. However, ClearOne is 2.9 times more volatile than LB Foster. It trades about 0.04 of its potential returns per unit of risk. LB Foster is currently generating about 0.06 per unit of risk. If you would invest 42.00 in ClearOne on September 12, 2024 and sell it today you would earn a total of 17.00 from holding ClearOne or generate 40.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ClearOne vs. LB Foster
Performance |
| Timeline |
| ClearOne |
| LB Foster |
ClearOne and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ClearOne and LB Foster
The main advantage of trading using opposite ClearOne and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearOne 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.| ClearOne vs. Actelis Networks | ClearOne vs. Siyata Mobile | ClearOne vs. SatixFy Communications | ClearOne vs. Mobilicom Limited American |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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