Correlation Between Crane and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Crane 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 Crane and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Luxfer Holdings PLC, you can compare the effects of market volatilities on Crane 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 Crane with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Luxfer Holdings.
Diversification Opportunities for Crane and Luxfer Holdings
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crane and Luxfer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company 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 Crane 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 Crane Company 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 Crane i.e., Crane and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Crane and Luxfer Holdings
Allowing for the 90-day total investment horizon Crane is expected to generate 1.08 times less return on investment than Luxfer Holdings. But when comparing it to its historical volatility, Crane Company is 1.5 times less risky than Luxfer Holdings. It trades about 0.13 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 820.00 in Luxfer Holdings PLC on August 27, 2024 and sell it today you would earn a total of 602.00 from holding Luxfer Holdings PLC or generate 73.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane Company vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Crane Company |
| Luxfer Holdings PLC |
Crane and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Luxfer Holdings
The main advantage of trading using opposite Crane and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane 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.| Crane vs. Aquagold International | Crane vs. Morningstar Unconstrained Allocation | Crane vs. High Yield Municipal Fund | Crane vs. Thrivent High Yield |
| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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