Correlation Between LB Foster and Viking Holdings
Can any of the company-specific risk be diversified away by investing in both LB Foster and Viking Holdings 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 Viking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Viking Holdings, you can compare the effects of market volatilities on LB Foster and Viking Holdings 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 Viking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Viking Holdings.
Diversification Opportunities for LB Foster and Viking Holdings
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FSTR and Viking is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Viking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Holdings 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 Viking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Holdings has no effect on the direction of LB Foster i.e., LB Foster and Viking Holdings go up and down completely randomly.
Pair Corralation between LB Foster and Viking Holdings
Given the investment horizon of 90 days LB Foster is expected to generate 1.57 times less return on investment than Viking Holdings. In addition to that, LB Foster is 1.18 times more volatile than Viking Holdings. It trades about 0.1 of its total potential returns per unit of risk. Viking Holdings is currently generating about 0.18 per unit of volatility. If you would invest 2,610 in Viking Holdings on August 27, 2024 and sell it today you would earn a total of 1,924 from holding Viking Holdings or generate 73.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 29.23% |
| Values | Daily Returns |
LB Foster vs. Viking Holdings
Performance |
| Timeline |
| LB Foster |
| Viking Holdings |
LB Foster and Viking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Viking Holdings
The main advantage of trading using opposite LB Foster and Viking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Viking Holdings 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 Viking Holdings will offset losses from the drop in Viking Holdings' long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Viking Holdings vs. Hudson Technologies | Viking Holdings vs. Sealed Air | Viking Holdings vs. Seadrill Limited | Viking Holdings vs. Luxfer Holdings PLC |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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