Correlation Between Axalta Coating and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Axalta Coating 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 Axalta Coating and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Luxfer Holdings PLC, you can compare the effects of market volatilities on Axalta Coating 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 Axalta Coating with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Luxfer Holdings.
Diversification Opportunities for Axalta Coating and Luxfer Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axalta and Luxfer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems 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 Axalta Coating 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 Axalta Coating Systems 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 Axalta Coating i.e., Axalta Coating and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Axalta Coating and Luxfer Holdings
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.61 times more return on investment than Luxfer Holdings. However, Axalta Coating Systems is 1.63 times less risky than Luxfer Holdings. It trades about 0.33 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.18 per unit of risk. If you would invest 3,559 in Axalta Coating Systems on August 28, 2024 and sell it today you would earn a total of 570.00 from holding Axalta Coating Systems or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Axalta Coating Systems |
| Luxfer Holdings PLC |
Axalta Coating and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Luxfer Holdings
The main advantage of trading using opposite Axalta Coating and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating 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.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| Luxfer Holdings vs. Aquagold International | Luxfer Holdings vs. Morningstar Unconstrained Allocation | Luxfer Holdings vs. High Yield Municipal Fund | Luxfer Holdings vs. Thrivent High Yield |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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