Correlation Between Dow Jones and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Luxfer Holdings PLC, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Luxfer Holdings.
Diversification Opportunities for Dow Jones and Luxfer Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Luxfer is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Dow Jones and Luxfer Holdings
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.81 times less return on investment than Luxfer Holdings. But when comparing it to its historical volatility, Dow Jones Industrial is 3.66 times less risky than Luxfer Holdings. It trades about 0.25 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,286 in Luxfer Holdings PLC on August 29, 2024 and sell it today you would earn a total of 194.00 from holding Luxfer Holdings PLC or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Luxfer Holdings PLC
Performance |
| Timeline |
Dow Jones and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Luxfer Holdings PLC
Pair trading matchups for Luxfer Holdings
Pair Trading with Dow Jones and Luxfer Holdings
The main advantage of trading using opposite Dow Jones and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Hurco Companies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |