Correlation Between LB Foster and Zeo Energy
Can any of the company-specific risk be diversified away by investing in both LB Foster and Zeo Energy 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 Zeo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Zeo Energy Corp, you can compare the effects of market volatilities on LB Foster and Zeo Energy 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 Zeo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Zeo Energy.
Diversification Opportunities for LB Foster and Zeo Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FSTR and Zeo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Zeo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeo Energy Corp 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 Zeo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeo Energy Corp has no effect on the direction of LB Foster i.e., LB Foster and Zeo Energy go up and down completely randomly.
Pair Corralation between LB Foster and Zeo Energy
Given the investment horizon of 90 days LB Foster is expected to generate 1.35 times more return on investment than Zeo Energy. However, LB Foster is 1.35 times more volatile than Zeo Energy Corp. It trades about 0.51 of its potential returns per unit of risk. Zeo Energy Corp is currently generating about -0.12 per unit of risk. If you would invest 1,911 in LB Foster on September 3, 2024 and sell it today you would earn a total of 962.00 from holding LB Foster or generate 50.34% 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. Zeo Energy Corp
Performance |
| Timeline |
| LB Foster |
| Zeo Energy Corp |
LB Foster and Zeo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Zeo Energy
The main advantage of trading using opposite LB Foster and Zeo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Zeo Energy 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 Zeo Energy will offset losses from the drop in Zeo Energy's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Zeo Energy vs. Jeld Wen Holding | Zeo Energy vs. Griffon | Zeo Energy vs. Chemours Co | Zeo Energy vs. Apogee Enterprises |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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