Correlation Between LB Foster and U Haul
Can any of the company-specific risk be diversified away by investing in both LB Foster and U Haul 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 U Haul into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and U Haul Holding, you can compare the effects of market volatilities on LB Foster and U Haul 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 U Haul. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and U Haul.
Diversification Opportunities for LB Foster and U Haul
Very good diversification
The 3 months correlation between FSTR and UHAL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding 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 U Haul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of LB Foster i.e., LB Foster and U Haul go up and down completely randomly.
Pair Corralation between LB Foster and U Haul
Given the investment horizon of 90 days LB Foster is expected to generate 2.05 times more return on investment than U Haul. However, LB Foster is 2.05 times more volatile than U Haul Holding. It trades about 0.21 of its potential returns per unit of risk. U Haul Holding is currently generating about 0.02 per unit of risk. If you would invest 1,945 in LB Foster on August 29, 2024 and sell it today you would earn a total of 887.00 from holding LB Foster or generate 45.6% 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. U Haul Holding
Performance |
| Timeline |
| LB Foster |
| U Haul Holding |
LB Foster and U Haul Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and U Haul
The main advantage of trading using opposite LB Foster and U Haul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, U Haul 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 U Haul will offset losses from the drop in U Haul's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern | LB Foster vs. Greenbrier Companies |
| U Haul vs. Air Lease | U Haul vs. HE Equipment Services | U Haul vs. GATX Corporation | U Haul vs. Custom Truck One |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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