Correlation Between Freightcar America and LB Foster
Can any of the company-specific risk be diversified away by investing in both Freightcar America 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 Freightcar America and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freightcar America and LB Foster, you can compare the effects of market volatilities on Freightcar America 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 Freightcar America with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freightcar America and LB Foster.
Diversification Opportunities for Freightcar America and LB Foster
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freightcar and FSTR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Freightcar America and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Freightcar America 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 Freightcar America 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 Freightcar America i.e., Freightcar America and LB Foster go up and down completely randomly.
Pair Corralation between Freightcar America and LB Foster
Given the investment horizon of 90 days Freightcar America is expected to under-perform the LB Foster. In addition to that, Freightcar America is 2.3 times more volatile than LB Foster. It trades about -0.07 of its total potential returns per unit of risk. LB Foster is currently generating about 0.36 per unit of volatility. If you would invest 1,963 in LB Foster on August 23, 2024 and sell it today you would earn a total of 764.00 from holding LB Foster or generate 38.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freightcar America vs. LB Foster
Performance |
| Timeline |
| Freightcar America |
| LB Foster |
Freightcar America and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freightcar America and LB Foster
The main advantage of trading using opposite Freightcar America and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightcar America 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.| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. Westinghouse Air Brake | Freightcar America vs. CSX Corporation |
| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |