Correlation Between LB Foster and Emeren
Can any of the company-specific risk be diversified away by investing in both LB Foster and Emeren 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 Emeren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Emeren Group, you can compare the effects of market volatilities on LB Foster and Emeren 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 Emeren. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Emeren.
Diversification Opportunities for LB Foster and Emeren
Excellent diversification
The 3 months correlation between FSTR and Emeren is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren 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 Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of LB Foster i.e., LB Foster and Emeren go up and down completely randomly.
Pair Corralation between LB Foster and Emeren
Given the investment horizon of 90 days LB Foster is expected to generate 0.82 times more return on investment than Emeren. However, LB Foster is 1.22 times less risky than Emeren. It trades about 0.41 of its potential returns per unit of risk. Emeren Group is currently generating about -0.16 per unit of risk. If you would invest 1,957 in LB Foster on August 30, 2024 and sell it today you would earn a total of 873.00 from holding LB Foster or generate 44.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Emeren Group
Performance |
| Timeline |
| LB Foster |
| Emeren Group |
LB Foster and Emeren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Emeren
The main advantage of trading using opposite LB Foster and Emeren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Emeren 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 Emeren will offset losses from the drop in Emeren's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Emeren vs. Canadian Solar | Emeren vs. Maxeon Solar Technologies | Emeren vs. SolarEdge Technologies | Emeren vs. Sunnova Energy International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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