Correlation Between Solarmax Technology and LB Foster
Can any of the company-specific risk be diversified away by investing in both Solarmax Technology 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 Solarmax Technology and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solarmax Technology Common and LB Foster, you can compare the effects of market volatilities on Solarmax Technology 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 Solarmax Technology with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solarmax Technology and LB Foster.
Diversification Opportunities for Solarmax Technology and LB Foster
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solarmax and FSTR is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Solarmax Technology Common and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Solarmax Technology 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 Solarmax Technology Common 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 Solarmax Technology i.e., Solarmax Technology and LB Foster go up and down completely randomly.
Pair Corralation between Solarmax Technology and LB Foster
Given the investment horizon of 90 days Solarmax Technology Common is expected to generate 2.74 times more return on investment than LB Foster. However, Solarmax Technology is 2.74 times more volatile than LB Foster. It trades about 0.09 of its potential returns per unit of risk. LB Foster is currently generating about 0.12 per unit of risk. If you would invest 162.00 in Solarmax Technology Common on November 1, 2024 and sell it today you would earn a total of 12.00 from holding Solarmax Technology Common or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solarmax Technology Common vs. LB Foster
Performance |
| Timeline |
| Solarmax Technology |
| LB Foster |
Solarmax Technology and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solarmax Technology and LB Foster
The main advantage of trading using opposite Solarmax Technology and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solarmax Technology 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.| Solarmax Technology vs. Cheche Group Class | Solarmax Technology vs. Keurig Dr Pepper | Solarmax Technology vs. Life Insurance | Solarmax Technology vs. Compania Cervecerias Unidas |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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