Correlation Between Titan Machinery and LB Foster
Can any of the company-specific risk be diversified away by investing in both Titan Machinery 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 Titan Machinery and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and LB Foster, you can compare the effects of market volatilities on Titan Machinery 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 Titan Machinery with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and LB Foster.
Diversification Opportunities for Titan Machinery and LB Foster
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Titan and FSTR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Titan Machinery 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 Titan Machinery 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 Titan Machinery i.e., Titan Machinery and LB Foster go up and down completely randomly.
Pair Corralation between Titan Machinery and LB Foster
Given the investment horizon of 90 days Titan Machinery is expected to under-perform the LB Foster. In addition to that, Titan Machinery is 1.02 times more volatile than LB Foster. It trades about -0.05 of its total potential returns per unit of risk. LB Foster is currently generating about 0.1 per unit of volatility. If you would invest 1,066 in LB Foster on August 31, 2024 and sell it today you would earn a total of 1,764 from holding LB Foster or generate 165.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. LB Foster
Performance |
| Timeline |
| Titan Machinery |
| LB Foster |
Titan Machinery and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and LB Foster
The main advantage of trading using opposite Titan Machinery and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery 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.| Titan Machinery vs. DXP Enterprises | Titan Machinery vs. Watsco Inc | Titan Machinery vs. Distribution Solutions Group | Titan Machinery vs. SiteOne Landscape Supply |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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