Correlation Between Amgen and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Amgen and Luxfer Holdings 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 Amgen and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Luxfer Holdings PLC, you can compare the effects of market volatilities on Amgen and Luxfer Holdings 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 Amgen with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Luxfer Holdings.
Diversification Opportunities for Amgen and Luxfer Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amgen and Luxfer is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC and Amgen 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 Amgen Inc are associated (or correlated) with Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of Amgen i.e., Amgen and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Amgen and Luxfer Holdings
Given the investment horizon of 90 days Amgen is expected to generate 2.58 times less return on investment than Luxfer Holdings. But when comparing it to its historical volatility, Amgen Inc is 1.77 times less risky than Luxfer Holdings. It trades about 0.02 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,276 in Luxfer Holdings PLC on August 30, 2024 and sell it today you would earn a total of 204.00 from holding Luxfer Holdings PLC or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Amgen Inc |
| Luxfer Holdings PLC |
Amgen and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Luxfer Holdings
The main advantage of trading using opposite Amgen and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Luxfer Holdings 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 Luxfer Holdings will offset losses from the drop in Luxfer Holdings' long position.The idea behind Amgen Inc and Luxfer Holdings PLC 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.| Luxfer Holdings vs. Illinois Tool Works | Luxfer Holdings vs. Pentair PLC | Luxfer Holdings vs. Emerson Electric | Luxfer Holdings vs. Smith AO |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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