Correlation Between LB Foster and Sligro Food
Can any of the company-specific risk be diversified away by investing in both LB Foster and Sligro Food 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 Sligro Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Sligro Food Group, you can compare the effects of market volatilities on LB Foster and Sligro Food 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 Sligro Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Sligro Food.
Diversification Opportunities for LB Foster and Sligro Food
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FSTR and Sligro is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of LB Foster i.e., LB Foster and Sligro Food go up and down completely randomly.
Pair Corralation between LB Foster and Sligro Food
Given the investment horizon of 90 days LB Foster is expected to generate 2.08 times more return on investment than Sligro Food. However, LB Foster is 2.08 times more volatile than Sligro Food Group. It trades about 0.1 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.06 per unit of risk. If you would invest 925.00 in LB Foster on September 2, 2024 and sell it today you would earn a total of 1,948 from holding LB Foster or generate 210.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 87.5% |
| Values | Daily Returns |
LB Foster vs. Sligro Food Group
Performance |
| Timeline |
| LB Foster |
| Sligro Food Group |
LB Foster and Sligro Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Sligro Food
The main advantage of trading using opposite LB Foster and Sligro Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Sligro Food 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 Sligro Food will offset losses from the drop in Sligro Food's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Sligro Food vs. Legacy Education | Sligro Food vs. Apple Inc | Sligro Food vs. NVIDIA | Sligro Food vs. Microsoft |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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