Correlation Between LB Foster and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both LB Foster and Brookfield Business 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 LB Foster and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Brookfield Business Partners, you can compare the effects of market volatilities on LB Foster and Brookfield Business 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 LB Foster with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Brookfield Business.
Diversification Opportunities for LB Foster and Brookfield Business
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSTR and Brookfield is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and LB Foster 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 LB Foster are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of LB Foster i.e., LB Foster and Brookfield Business go up and down completely randomly.
Pair Corralation between LB Foster and Brookfield Business
Given the investment horizon of 90 days LB Foster is expected to generate 2.19 times more return on investment than Brookfield Business. However, LB Foster is 2.19 times more volatile than Brookfield Business Partners. It trades about 0.39 of its potential returns per unit of risk. Brookfield Business Partners is currently generating about 0.37 per unit of risk. If you would invest 1,980 in LB Foster on August 27, 2024 and sell it today you would earn a total of 800.00 from holding LB Foster or generate 40.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Brookfield Business Partners
Performance |
| Timeline |
| LB Foster |
| Brookfield Business |
LB Foster and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Brookfield Business
The main advantage of trading using opposite LB Foster and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Brookfield Business 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 Brookfield Business will offset losses from the drop in Brookfield Business' long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Brookfield Business vs. Canadian Solar | Brookfield Business vs. Maxeon Solar Technologies | Brookfield Business vs. SolarEdge Technologies | Brookfield Business vs. Sunnova Energy International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |