Correlation Between LB Foster and Hyliion Holdings

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

By analyzing existing cross correlation between LB Foster and Hyliion Holdings Corp, you can compare the effects of market volatilities on LB Foster and Hyliion Holdings 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 Hyliion Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Hyliion Holdings.

Diversification Opportunities for LB Foster and Hyliion Holdings

0.74

Correlation Coefficient

LB Foster  Hyliion Holdings

Poor diversification

The 3 months correlation between FSTR and Hyliion is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion Holdings Corp 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 Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of LB Foster i.e., LB Foster and Hyliion Holdings go up and down completely randomly.

Pair Corralation between LB Foster and Hyliion Holdings

Given the investment horizon of 90 days LB Foster is expected to generate 0.65 times more return on investment than Hyliion Holdings. However, LB Foster is 1.54 times less risky than Hyliion Holdings. It trades about -0.14 of its potential returns per unit of risk. Hyliion Holdings Corp is currently generating about -0.19 per unit of risk. If you would invest  2,697  in LB Foster on December 28, 2024 and sell it today you would lose (639.00) from holding LB Foster or give up 23.69% of portfolio value over 90 days.

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

LB Foster  vs.  Hyliion Holdings Corp

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.

Hyliion Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyliion Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with LB Foster and Hyliion Holdings

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

The idea behind LB Foster and Hyliion Holdings Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.