Correlation Between LB Foster and Cosan SA
Can any of the company-specific risk be diversified away by investing in both LB Foster and Cosan SA 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 LB Foster and Cosan SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Cosan SA ADR, you can compare the effects of market volatilities on LB Foster and Cosan SA 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 LB Foster with a short position of Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Cosan SA.
Diversification Opportunities for LB Foster and Cosan SA
Excellent diversification
The 3 months correlation between FSTR and Cosan is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and Cosan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA ADR and LB Foster 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 LB Foster are associated (or correlated) with Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA ADR has no effect on the direction of LB Foster i.e., LB Foster and Cosan SA go up and down completely randomly.
Pair Corralation between LB Foster and Cosan SA
Given the investment horizon of 90 days LB Foster is expected to generate 0.68 times more return on investment than Cosan SA. However, LB Foster is 1.48 times less risky than Cosan SA. It trades about 0.13 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.05 per unit of risk. If you would invest 1,925 in LB Foster on April 21, 2025 and sell it today you would earn a total of 349.00 from holding LB Foster or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Cosan SA ADR
Performance |
| Timeline |
| LB Foster |
| Cosan SA ADR |
LB Foster and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Cosan SA
The main advantage of trading using opposite LB Foster and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, Cosan SA 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 Cosan SA will offset losses from the drop in Cosan SA's long position.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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