Correlation Between LB Foster and GMéxico Transportes
Can any of the company-specific risk be diversified away by investing in both LB Foster and GMéxico Transportes 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 GMéxico Transportes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and GMxico Transportes SAB, you can compare the effects of market volatilities on LB Foster and GMéxico Transportes 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 GMéxico Transportes. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and GMéxico Transportes.
Diversification Opportunities for LB Foster and GMéxico Transportes
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FSTR and GMéxico is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB 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 GMéxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of LB Foster i.e., LB Foster and GMéxico Transportes go up and down completely randomly.
Pair Corralation between LB Foster and GMéxico Transportes
Given the investment horizon of 90 days LB Foster is expected to generate 5.81 times more return on investment than GMéxico Transportes. However, LB Foster is 5.81 times more volatile than GMxico Transportes SAB. It trades about 0.39 of its potential returns per unit of risk. GMxico Transportes SAB is currently generating about -0.19 per unit of risk. If you would invest 1,958 in LB Foster on August 25, 2024 and sell it today you would earn a total of 822.00 from holding LB Foster or generate 41.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LB Foster vs. GMxico Transportes SAB
Performance |
| Timeline |
| LB Foster |
| GMxico Transportes SAB |
LB Foster and GMéxico Transportes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and GMéxico Transportes
The main advantage of trading using opposite LB Foster and GMéxico Transportes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, GMéxico Transportes 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 GMéxico Transportes will offset losses from the drop in GMéxico Transportes' long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| GMéxico Transportes vs. West Japan Railway | GMéxico Transportes vs. Central Japan Railway | GMéxico Transportes vs. LB Foster | GMéxico Transportes 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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