Correlation Between Westport Fuel and LB Foster
Can any of the company-specific risk be diversified away by investing in both Westport Fuel 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 Westport Fuel and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and LB Foster, you can compare the effects of market volatilities on Westport Fuel 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 Westport Fuel with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and LB Foster.
Diversification Opportunities for Westport Fuel and LB Foster
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westport and FSTR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Westport Fuel 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 Westport Fuel Systems 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 Westport Fuel i.e., Westport Fuel and LB Foster go up and down completely randomly.
Pair Corralation between Westport Fuel and LB Foster
Given the investment horizon of 90 days Westport Fuel is expected to generate 54.25 times less return on investment than LB Foster. But when comparing it to its historical volatility, Westport Fuel Systems is 2.09 times less risky than LB Foster. It trades about 0.01 of its potential returns per unit of risk. LB Foster is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,940 in LB Foster on August 24, 2024 and sell it today you would earn a total of 787.00 from holding LB Foster or generate 40.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. LB Foster
Performance |
| Timeline |
| Westport Fuel Systems |
| LB Foster |
Westport Fuel and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and LB Foster
The main advantage of trading using opposite Westport Fuel and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel 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.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |