Correlation Between LB Foster and Universal Robina
Can any of the company-specific risk be diversified away by investing in both LB Foster and Universal Robina 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 Universal Robina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Universal Robina, you can compare the effects of market volatilities on LB Foster and Universal Robina 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 Universal Robina. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Universal Robina.
Diversification Opportunities for LB Foster and Universal Robina
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FSTR and Universal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Universal Robina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Robina 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 Universal Robina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Robina has no effect on the direction of LB Foster i.e., LB Foster and Universal Robina go up and down completely randomly.
Pair Corralation between LB Foster and Universal Robina
Given the investment horizon of 90 days LB Foster is expected to generate 0.52 times more return on investment than Universal Robina. However, LB Foster is 1.93 times less risky than Universal Robina. It trades about 0.08 of its potential returns per unit of risk. Universal Robina is currently generating about -0.01 per unit of risk. If you would invest 1,135 in LB Foster on October 7, 2024 and sell it today you would earn a total of 1,616 from holding LB Foster or generate 142.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 62.5% |
| Values | Daily Returns |
LB Foster vs. Universal Robina
Performance |
| Timeline |
| LB Foster |
| Universal Robina |
LB Foster and Universal Robina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Universal Robina
The main advantage of trading using opposite LB Foster and Universal Robina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Universal Robina 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 Universal Robina will offset losses from the drop in Universal Robina's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Universal Robina vs. Playstudios | Universal Robina vs. Universal Music Group | Universal Robina vs. ServiceNow | Universal Robina vs. Take Two Interactive Software |
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 Stocks Directory module to find actively traded stocks across global markets.
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