Correlation Between LB Foster and Lucid

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

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

Diversification Opportunities for LB Foster and Lucid

-0.55

Correlation Coefficient

LB Foster  Lucid

Excellent diversification

The 3 months correlation between FSTR and Lucid is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of LB Foster i.e., LB Foster and Lucid go up and down completely randomly.

Pair Corralation between LB Foster and Lucid

Given the investment horizon of 90 days LB Foster is expected to generate 0.59 times more return on investment than Lucid. However, LB Foster is 1.69 times less risky than Lucid. It trades about 0.05 of its potential returns per unit of risk. Lucid Group is currently generating about 0.0 per unit of risk. If you would invest  1,908  in LB Foster on September 24, 2024 and sell it today you would earn a total of  731.00  from holding LB Foster or generate 38.31% return on investment over 90 days.

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

LB Foster  vs.  Lucid Group

LB Foster

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

Lucid Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucid Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with LB Foster and Lucid

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

The idea behind LB Foster and Lucid Group 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.