Correlation Between LB Foster and PACCAR

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

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

Diversification Opportunities for LB Foster and PACCAR

0.14

Correlation Coefficient

LB Foster  PACCAR

Average diversification

The 3 months correlation between FSTR and PACCAR is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc 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 PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of LB Foster i.e., LB Foster and PACCAR go up and down completely randomly.

Pair Corralation between LB Foster and PACCAR

Given the investment horizon of 90 days LB Foster is expected to generate 1.63 times more return on investment than PACCAR. However, LB Foster is 1.63 times more volatile than PACCAR Inc. It trades about 0.06 of its potential returns per unit of risk. PACCAR Inc is currently generating about 0.0 per unit of risk. If you would invest  2,479  in LB Foster on July 26, 2025 and sell it today you would earn a total of  203.00  from holding LB Foster or generate 8.19% return on investment over 90 days.

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

LB Foster  vs.  PACCAR Inc

LB Foster

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, LB Foster may actually be approaching a critical reversion point that can send shares even higher in November 2025.

PACCAR Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days PACCAR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PACCAR is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LB Foster and PACCAR

The main advantage of trading using opposite LB Foster and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster position performs unexpectedly, PACCAR 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 PACCAR will offset losses from the drop in PACCAR's long position.

The idea behind LB Foster and PACCAR Inc 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.