Correlation Between LB Foster and Welsbach Technology
Can any of the company-specific risk be diversified away by investing in both LB Foster and Welsbach Technology 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 Welsbach Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Welsbach Technology Metals, you can compare the effects of market volatilities on LB Foster and Welsbach Technology 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 Welsbach Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Welsbach Technology.
Diversification Opportunities for LB Foster and Welsbach Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FSTR and Welsbach is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Welsbach Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welsbach Technology 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 Welsbach Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welsbach Technology has no effect on the direction of LB Foster i.e., LB Foster and Welsbach Technology go up and down completely randomly.
Pair Corralation between LB Foster and Welsbach Technology
Given the investment horizon of 90 days LB Foster is expected to generate 9.59 times more return on investment than Welsbach Technology. However, LB Foster is 9.59 times more volatile than Welsbach Technology Metals. It trades about 0.08 of its potential returns per unit of risk. Welsbach Technology Metals is currently generating about 0.05 per unit of risk. If you would invest 1,415 in LB Foster on September 2, 2024 and sell it today you would earn a total of 1,458 from holding LB Foster or generate 103.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Welsbach Technology Metals
Performance |
| Timeline |
| LB Foster |
| Welsbach Technology |
LB Foster and Welsbach Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Welsbach Technology
The main advantage of trading using opposite LB Foster and Welsbach Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Welsbach Technology 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 Welsbach Technology will offset losses from the drop in Welsbach Technology's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Welsbach Technology vs. Visa Class A | Welsbach Technology vs. Diamond Hill Investment | Welsbach Technology vs. Distoken Acquisition | Welsbach Technology vs. Associated Capital Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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