Correlation Between CSW Industrials and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both CSW Industrials 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 CSW Industrials and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSW Industrials and Luxfer Holdings PLC, you can compare the effects of market volatilities on CSW Industrials 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 CSW Industrials with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSW Industrials and Luxfer Holdings.
Diversification Opportunities for CSW Industrials and Luxfer Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CSW and Luxfer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CSW Industrials 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 CSW Industrials 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 CSW Industrials 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 CSW Industrials i.e., CSW Industrials and Luxfer Holdings go up and down completely randomly.
Pair Corralation between CSW Industrials and Luxfer Holdings
Given the investment horizon of 90 days CSW Industrials is expected to generate 0.89 times more return on investment than Luxfer Holdings. However, CSW Industrials is 1.13 times less risky than Luxfer Holdings. It trades about 0.18 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.07 per unit of risk. If you would invest 25,846 in CSW Industrials on August 24, 2024 and sell it today you would earn a total of 15,720 from holding CSW Industrials or generate 60.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSW Industrials vs. Luxfer Holdings PLC
Performance |
| Timeline |
| CSW Industrials |
| Luxfer Holdings PLC |
CSW Industrials and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSW Industrials and Luxfer Holdings
The main advantage of trading using opposite CSW Industrials and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSW Industrials 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.| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. John Bean Technologies | CSW Industrials vs. ITT Inc |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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