Correlation Between LB Foster and Marex Group
Can any of the company-specific risk be diversified away by investing in both LB Foster and Marex Group 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 Marex Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Marex Group plc, you can compare the effects of market volatilities on LB Foster and Marex Group 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 Marex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Marex Group.
Diversification Opportunities for LB Foster and Marex Group
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between FSTR and Marex is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of LB Foster i.e., LB Foster and Marex Group go up and down completely randomly.
Pair Corralation between LB Foster and Marex Group
Given the investment horizon of 90 days LB Foster is expected to under-perform the Marex Group. But the stock apears to be less risky and, when comparing its historical volatility, LB Foster is 1.1 times less risky than Marex Group. The stock trades about -0.11 of its potential returns per unit of risk. The Marex Group plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,530 in Marex Group plc on November 29, 2024 and sell it today you would earn a total of 196.00 from holding Marex Group plc or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Marex Group plc
Performance |
| Timeline |
| LB Foster |
| Marex Group plc |
LB Foster and Marex Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Marex Group
The main advantage of trading using opposite LB Foster and Marex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Marex Group 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 Marex Group will offset losses from the drop in Marex Group's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Marex Group vs. Braskem SA Class | Marex Group vs. Ecovyst | Marex Group vs. Codexis | Marex Group vs. Solstad Offshore ASA |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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