Correlation Between Micron Technology and LB Foster
Can any of the company-specific risk be diversified away by investing in both Micron Technology 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 Micron Technology and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and LB Foster, you can compare the effects of market volatilities on Micron Technology 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 Micron Technology with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and LB Foster.
Diversification Opportunities for Micron Technology and LB Foster
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Micron and FSTR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and LB Foster go up and down completely randomly.
Pair Corralation between Micron Technology and LB Foster
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.32 times less return on investment than LB Foster. In addition to that, Micron Technology is 1.07 times more volatile than LB Foster. It trades about 0.1 of its total potential returns per unit of risk. LB Foster is currently generating about 0.26 per unit of volatility. If you would invest 1,850 in LB Foster on September 6, 2024 and sell it today you would earn a total of 1,075 from holding LB Foster or generate 58.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Micron Technology vs. LB Foster
Performance |
Timeline |
Micron Technology |
LB Foster |
Micron Technology and LB Foster Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and LB Foster
The main advantage of trading using opposite Micron Technology and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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.Micron Technology vs. Marti Technologies | Micron Technology vs. Liberty Northwest Bancorp | Micron Technology vs. Aegean Airlines SA | Micron Technology vs. United Fire Group |
LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |