Correlation Between APACHE and LB Foster
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By analyzing existing cross correlation between APACHE P 425 and LB Foster, you can compare the effects of market volatilities on APACHE 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 APACHE with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of APACHE and LB Foster.
Diversification Opportunities for APACHE and LB Foster
Very good diversification
The 3 months correlation between APACHE and FSTR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding APACHE P 425 and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and APACHE 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 APACHE P 425 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 APACHE i.e., APACHE and LB Foster go up and down completely randomly.
Pair Corralation between APACHE and LB Foster
Assuming the 90 days trading horizon APACHE P 425 is expected to under-perform the LB Foster. But the bond apears to be less risky and, when comparing its historical volatility, APACHE P 425 is 1.21 times less risky than LB Foster. The bond trades about -0.07 of its potential returns per unit of risk. The LB Foster is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,980 in LB Foster on August 29, 2024 and sell it today you would earn a total of 852.00 from holding LB Foster or generate 43.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.26% |
| Values | Daily Returns |
APACHE P 425 vs. LB Foster
Performance |
| Timeline |
| APACHE P 425 |
| LB Foster |
APACHE and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APACHE and LB Foster
The main advantage of trading using opposite APACHE and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APACHE 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.The idea behind APACHE P 425 and LB Foster pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LB Foster vs. Trinity Industries | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern | LB Foster vs. Greenbrier Companies |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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