Correlation Between LB Foster and Cresud SACIF
Can any of the company-specific risk be diversified away by investing in both LB Foster and Cresud SACIF 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 Cresud SACIF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Cresud SACIF y, you can compare the effects of market volatilities on LB Foster and Cresud SACIF 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 Cresud SACIF. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Cresud SACIF.
Diversification Opportunities for LB Foster and Cresud SACIF
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSTR and Cresud is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Cresud SACIF y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SACIF y 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 Cresud SACIF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SACIF y has no effect on the direction of LB Foster i.e., LB Foster and Cresud SACIF go up and down completely randomly.
Pair Corralation between LB Foster and Cresud SACIF
Given the investment horizon of 90 days LB Foster is expected to generate 1.07 times less return on investment than Cresud SACIF. But when comparing it to its historical volatility, LB Foster is 1.57 times less risky than Cresud SACIF. It trades about 0.41 of its potential returns per unit of risk. Cresud SACIF y is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Cresud SACIF y on August 31, 2024 and sell it today you would earn a total of 28.00 from holding Cresud SACIF y or generate 43.75% 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. Cresud SACIF y
Performance |
| Timeline |
| LB Foster |
| Cresud SACIF y |
LB Foster and Cresud SACIF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Cresud SACIF
The main advantage of trading using opposite LB Foster and Cresud SACIF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Cresud SACIF 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 Cresud SACIF will offset losses from the drop in Cresud SACIF's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Cresud SACIF vs. Landsea Homes | Cresud SACIF vs. Canterbury Park Holding | Cresud SACIF vs. Evolv Technologies Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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