Correlation Between Boeing and LB Foster

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

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

Diversification Opportunities for Boeing and LB Foster

-0.77

Correlation Coefficient

Boeing  LB Foster

Pay attention - limited upside

The 3 months correlation between Boeing and FSTR is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Boeing 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 The Boeing 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 Boeing i.e., Boeing and LB Foster go up and down completely randomly.

Pair Corralation between Boeing and LB Foster

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.04 times more return on investment than LB Foster. However, Boeing is 1.04 times more volatile than LB Foster. It trades about 0.38 of its potential returns per unit of risk. LB Foster is currently generating about 0.0 per unit of risk. If you would invest  13,886  in The Boeing on February 6, 2025 and sell it today you would earn a total of  4,670  from holding The Boeing or generate 33.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  LB Foster

Boeing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Boeing and LB Foster

The main advantage of trading using opposite Boeing and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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 The Boeing 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.