Correlation Between Northstar Clean and LB Foster
Can any of the company-specific risk be diversified away by investing in both Northstar Clean 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 Northstar Clean and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and LB Foster, you can compare the effects of market volatilities on Northstar Clean 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 Northstar Clean with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and LB Foster.
Diversification Opportunities for Northstar Clean and LB Foster
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northstar and FSTR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Northstar Clean 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 Northstar Clean Technologies 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 Northstar Clean i.e., Northstar Clean and LB Foster go up and down completely randomly.
Pair Corralation between Northstar Clean and LB Foster
Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 1.37 times more return on investment than LB Foster. However, Northstar Clean is 1.37 times more volatile than LB Foster. It trades about 0.17 of its potential returns per unit of risk. LB Foster is currently generating about 0.21 per unit of risk. If you would invest 14.00 in Northstar Clean Technologies on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Northstar Clean Technologies or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. LB Foster
Performance |
| Timeline |
| Northstar Clean Tech |
| LB Foster |
Northstar Clean and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and LB Foster
The main advantage of trading using opposite Northstar Clean and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean 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.| Northstar Clean vs. Susglobal Energy Corp | Northstar Clean vs. LanzaTech Global | Northstar Clean vs. Aqua Metals | Northstar Clean vs. LiCycle Holdings Corp |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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