Correlation Between Lord Global and LB Foster

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

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

Diversification Opportunities for Lord Global and LB Foster

0.0

Correlation Coefficient

Lord Global  LB Foster

Pay attention - limited upside

The 3 months correlation between Lord and FSTR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lord Global Corp and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Lord Global 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 Lord Global Corp 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 Lord Global i.e., Lord Global and LB Foster go up and down completely randomly.

Pair Corralation between Lord Global and LB Foster

Given the investment horizon of 90 days Lord Global Corp is expected to generate 20.06 times more return on investment than LB Foster. However, Lord Global is 20.06 times more volatile than LB Foster. It trades about 0.06 of its potential returns per unit of risk. LB Foster is currently generating about 0.08 per unit of risk. If you would invest  0.01  in Lord Global Corp on October 10, 2024 and sell it today you would earn a total of  0.01  from holding Lord Global Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	69.7%
Values	Daily Returns

Lord Global Corp  vs.  LB Foster

Lord Global Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Lord Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LB Foster

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 14 (%) 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.

Pair Trading with Lord Global and LB Foster

The main advantage of trading using opposite Lord Global and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Global 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 Lord Global Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.