Correlation Between LB Foster and Suntory Beverage
Can any of the company-specific risk be diversified away by investing in both LB Foster and Suntory Beverage 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 Suntory Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Suntory Beverage Food, you can compare the effects of market volatilities on LB Foster and Suntory Beverage 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 Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Suntory Beverage.
Diversification Opportunities for LB Foster and Suntory Beverage
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FSTR and Suntory is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of LB Foster i.e., LB Foster and Suntory Beverage go up and down completely randomly.
Pair Corralation between LB Foster and Suntory Beverage
Given the investment horizon of 90 days LB Foster is expected to under-perform the Suntory Beverage. In addition to that, LB Foster is 1.32 times more volatile than Suntory Beverage Food. It trades about -0.11 of its total potential returns per unit of risk. Suntory Beverage Food is currently generating about 0.15 per unit of volatility. If you would invest 1,574 in Suntory Beverage Food on November 29, 2024 and sell it today you would earn a total of 77.00 from holding Suntory Beverage Food or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Suntory Beverage Food
Performance |
| Timeline |
| LB Foster |
| Suntory Beverage Food |
LB Foster and Suntory Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Suntory Beverage
The main advantage of trading using opposite LB Foster and Suntory Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Suntory Beverage 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 Suntory Beverage will offset losses from the drop in Suntory Beverage's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Suntory Beverage vs. Secom Co Ltd | Suntory Beverage vs. Mitsubishi Estate Co | Suntory Beverage vs. Shimano Inc ADR | Suntory Beverage vs. Sumitomo Chemical Co |
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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