Correlation Between Canadian National and LB Foster
Can any of the company-specific risk be diversified away by investing in both Canadian National 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 Canadian National and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian National Railway and LB Foster, you can compare the effects of market volatilities on Canadian National 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 Canadian National with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and LB Foster.
Diversification Opportunities for Canadian National and LB Foster
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and FSTR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Canadian National 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 Canadian National Railway 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 Canadian National i.e., Canadian National and LB Foster go up and down completely randomly.
Pair Corralation between Canadian National and LB Foster
Considering the 90-day investment horizon Canadian National is expected to generate 1.77 times less return on investment than LB Foster. But when comparing it to its historical volatility, Canadian National Railway is 1.64 times less risky than LB Foster. It trades about 0.03 of its potential returns per unit of risk. LB Foster is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,058 in LB Foster on March 27, 2025 and sell it today you would earn a total of 64.00 from holding LB Foster or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian National Railway vs. LB Foster
Performance |
| Timeline |
| Canadian National Railway |
| LB Foster |
Canadian National and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian National and LB Foster
The main advantage of trading using opposite Canadian National and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian National 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.| Canadian National vs. Union Pacific | Canadian National vs. CSX Corporation | Canadian National vs. Norfolk Southern | Canadian National vs. Westinghouse Air Brake |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |