Correlation Between LB Foster and Life Time
Can any of the company-specific risk be diversified away by investing in both LB Foster and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Life Time Group, you can compare the effects of market volatilities on LB Foster and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Life Time.
Diversification Opportunities for LB Foster and Life Time
Significant diversification
The 3 months correlation between FSTR and Life is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of LB Foster i.e., LB Foster and Life Time go up and down completely randomly.
Pair Corralation between LB Foster and Life Time
Given the investment horizon of 90 days LB Foster is expected to generate 2.37 times more return on investment than Life Time. However, LB Foster is 2.37 times more volatile than Life Time Group. It trades about 0.41 of its potential returns per unit of risk. Life Time Group is currently generating about 0.19 per unit of risk. If you would invest 1,980 in LB Foster on August 28, 2024 and sell it today you would earn a total of 848.00 from holding LB Foster or generate 42.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Life Time Group
Performance |
| Timeline |
| LB Foster |
| Life Time Group |
LB Foster and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Life Time
The main advantage of trading using opposite LB Foster and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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