Correlation Between 09261BAF7 and LB Foster

Can any of the company-specific risk be diversified away by investing in both 09261BAF7 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 09261BAF7 and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BX 285 05 AUG 51 and LB Foster, you can compare the effects of market volatilities on 09261BAF7 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 09261BAF7 with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of 09261BAF7 and LB Foster.

Diversification Opportunities for 09261BAF7 and LB Foster

-0.44

Correlation Coefficient

09261BAF7  LB Foster

Very good diversification

The 3 months correlation between 09261BAF7 and FSTR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BX 285 05 AUG 51 and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and 09261BAF7 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 BX 285 05 AUG 51 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 09261BAF7 i.e., 09261BAF7 and LB Foster go up and down completely randomly.

Pair Corralation between 09261BAF7 and LB Foster

Assuming the 90 days trading horizon BX 285 05 AUG 51 is expected to under-perform the LB Foster. But the bond apears to be less risky and, when comparing its historical volatility, BX 285 05 AUG 51 is 1.45 times less risky than LB Foster. The bond trades about -0.12 of its potential returns per unit of risk. The LB Foster is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,920  in LB Foster on December 1, 2024 and sell it today you would lose (175.00) from holding LB Foster or give up 5.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.0%
Values	Daily Returns

BX 285 05 AUG 51  vs.  LB Foster

BX 285 05

Risk-Adjusted Performance

Very Weak

Over the last 90 days BX 285 05 AUG 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BX 285 05 AUG 51 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 relatively invariable basic indicators, LB Foster is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with 09261BAF7 and LB Foster

The main advantage of trading using opposite 09261BAF7 and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 09261BAF7 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 BX 285 05 AUG 51 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.