Correlation Between Tat Techno and LB Foster
Can any of the company-specific risk be diversified away by investing in both Tat Techno 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 Tat Techno and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tat Techno and LB Foster, you can compare the effects of market volatilities on Tat Techno 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 Tat Techno with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tat Techno and LB Foster.
Diversification Opportunities for Tat Techno and LB Foster
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tat and FSTR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tat Techno and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Tat Techno 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 Tat Techno 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 Tat Techno i.e., Tat Techno and LB Foster go up and down completely randomly.
Pair Corralation between Tat Techno and LB Foster
Given the investment horizon of 90 days Tat Techno is expected to generate 1.03 times more return on investment than LB Foster. However, Tat Techno is 1.03 times more volatile than LB Foster. It trades about 0.11 of its potential returns per unit of risk. LB Foster is currently generating about 0.1 per unit of risk. If you would invest 588.00 in Tat Techno on September 3, 2024 and sell it today you would earn a total of 1,690 from holding Tat Techno or generate 287.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tat Techno vs. LB Foster
Performance |
| Timeline |
| Tat Techno |
| LB Foster |
Tat Techno and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tat Techno and LB Foster
The main advantage of trading using opposite Tat Techno and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tat Techno 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.| Tat Techno vs. Innovative Solutions and | Tat Techno vs. CPI Aerostructures | Tat Techno vs. Air Industries Group | Tat Techno vs. Ballistic Recovery Systems |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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