Correlation Between Hyster Yale and LB Foster

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

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

Diversification Opportunities for Hyster Yale and LB Foster

0.92

Correlation Coefficient

Hyster Yale  LB Foster

Almost no diversification

The 3 months correlation between Hyster and FSTR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and LB Foster go up and down completely randomly.

Pair Corralation between Hyster Yale and LB Foster

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to generate 0.83 times more return on investment than LB Foster. However, Hyster Yale Materials Handling is 1.2 times less risky than LB Foster. It trades about -0.07 of its potential returns per unit of risk. LB Foster is currently generating about -0.14 per unit of risk. If you would invest  4,984  in Hyster Yale Materials Handling on December 27, 2024 and sell it today you would lose (538.00) from holding Hyster Yale Materials Handling or give up 10.79% of portfolio value over 90 days.

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

Hyster Yale Materials Handling  vs.  LB Foster

Hyster Yale Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Hyster Yale and LB Foster

The main advantage of trading using opposite Hyster Yale and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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.

The idea behind Hyster Yale Materials Handling and LB Foster 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.