Correlation Between LB Foster and Brookfield Property

Can any of the company-specific risk be diversified away by investing in both LB Foster and Brookfield Property 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 LB Foster and Brookfield Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LB Foster and Brookfield Property Partners, you can compare the effects of market volatilities on LB Foster and Brookfield Property 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 LB Foster with a short position of Brookfield Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Brookfield Property.

Diversification Opportunities for LB Foster and Brookfield Property

-0.25

Correlation Coefficient

LB Foster  Brookfield Property

Very good diversification

The 3 months correlation between FSTR and Brookfield is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property and LB Foster 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 LB Foster are associated (or correlated) with Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of LB Foster i.e., LB Foster and Brookfield Property go up and down completely randomly.

Pair Corralation between LB Foster and Brookfield Property

Given the investment horizon of 90 days LB Foster is expected to under-perform the Brookfield Property. In addition to that, LB Foster is 2.4 times more volatile than Brookfield Property Partners. It trades about -0.14 of its total potential returns per unit of risk. Brookfield Property Partners is currently generating about 0.08 per unit of volatility. If you would invest  1,255  in Brookfield Property Partners on December 29, 2024 and sell it today you would earn a total of  73.00  from holding Brookfield Property Partners or generate 5.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LB Foster  vs.  Brookfield Property Partners

LB Foster

Risk-Adjusted Performance

Very Weak

Over the last 90 days LB Foster has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Brookfield Property

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Property Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brookfield Property is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LB Foster and Brookfield Property

The main advantage of trading using opposite LB Foster and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Brookfield Property 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 Brookfield Property will offset losses from the drop in Brookfield Property's long position.

The idea behind LB Foster and Brookfield Property Partners 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.