Correlation Between Origin Materials and LB Foster
Can any of the company-specific risk be diversified away by investing in both Origin Materials and LB Foster 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 Origin Materials and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and LB Foster, you can compare the effects of market volatilities on Origin Materials and LB Foster 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 Origin Materials with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and LB Foster.
Diversification Opportunities for Origin Materials and LB Foster
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Origin and FSTR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Origin Materials 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 Origin Materials are associated (or correlated) with LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Origin Materials i.e., Origin Materials and LB Foster go up and down completely randomly.
Pair Corralation between Origin Materials and LB Foster
Given the investment horizon of 90 days Origin Materials is expected to under-perform the LB Foster. In addition to that, Origin Materials is 1.21 times more volatile than LB Foster. It trades about -0.02 of its total potential returns per unit of risk. LB Foster is currently generating about 0.51 per unit of volatility. If you would invest 1,911 in LB Foster on September 4, 2024 and sell it today you would earn a total of 1,009 from holding LB Foster or generate 52.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Origin Materials vs. LB Foster
Performance |
| Timeline |
| Origin Materials |
| LB Foster |
Origin Materials and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and LB Foster
The main advantage of trading using opposite Origin Materials and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| LB Foster vs. Ayala | LB Foster vs. Steel Partners Holdings | LB Foster vs. FTAI Infrastructure | LB Foster vs. Griffon |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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