Correlation Between LB Foster and EQUIFAX

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

By analyzing existing cross correlation between LB Foster and EQUIFAX INC 7, you can compare the effects of market volatilities on LB Foster and EQUIFAX 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 EQUIFAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and EQUIFAX.

Diversification Opportunities for LB Foster and EQUIFAX

-0.39

Correlation Coefficient

LB Foster  EQUIFAX

Very good diversification

The 3 months correlation between FSTR and EQUIFAX is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and EQUIFAX INC 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUIFAX INC 7 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 EQUIFAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUIFAX INC 7 has no effect on the direction of LB Foster i.e., LB Foster and EQUIFAX go up and down completely randomly.

Pair Corralation between LB Foster and EQUIFAX

Given the investment horizon of 90 days LB Foster is expected to generate 2.01 times more return on investment than EQUIFAX. However, LB Foster is 2.01 times more volatile than EQUIFAX INC 7. It trades about 0.2 of its potential returns per unit of risk. EQUIFAX INC 7 is currently generating about -0.23 per unit of risk. If you would invest  2,041  in LB Foster on September 14, 2024 and sell it today you would earn a total of  818.00  from holding LB Foster or generate 40.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

LB Foster  vs.  EQUIFAX INC 7

LB Foster

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

EQUIFAX INC 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EQUIFAX INC 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for EQUIFAX INC 7 investors.

Pair Trading with LB Foster and EQUIFAX

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

The idea behind LB Foster and EQUIFAX INC 7 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 CEOs Directory module to screen CEOs from public companies around the world.