Correlation Between LB Foster and Brunswick
Can any of the company-specific risk be diversified away by investing in both LB Foster and Brunswick 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 Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Brunswick, you can compare the effects of market volatilities on LB Foster and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Brunswick.
Diversification Opportunities for LB Foster and Brunswick
Weak diversification
The 3 months correlation between FSTR and Brunswick is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of LB Foster i.e., LB Foster and Brunswick go up and down completely randomly.
Pair Corralation between LB Foster and Brunswick
Given the investment horizon of 90 days LB Foster is expected to generate 1.74 times more return on investment than Brunswick. However, LB Foster is 1.74 times more volatile than Brunswick. It trades about -0.06 of its potential returns per unit of risk. Brunswick is currently generating about -0.45 per unit of risk. If you would invest 2,701 in LB Foster on November 27, 2024 and sell it today you would lose (81.00) from holding LB Foster or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Brunswick
Performance |
| Timeline |
| LB Foster |
| Brunswick |
LB Foster and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Brunswick
The main advantage of trading using opposite LB Foster and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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