Correlation Between Fast Retailing and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Luxfer Holdings PLC, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Luxfer Holdings.
Diversification Opportunities for Fast Retailing and Luxfer Holdings
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and Luxfer is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co 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 Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Fast Retailing and Luxfer Holdings
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Luxfer Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 2.85 times less risky than Luxfer Holdings. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Luxfer Holdings PLC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Luxfer Holdings PLC on August 30, 2024 and sell it today you would earn a total of 205.00 from holding Luxfer Holdings PLC or generate 16.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fast Retailing Co vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Fast Retailing |
| Luxfer Holdings PLC |
Fast Retailing and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Luxfer Holdings
The main advantage of trading using opposite Fast Retailing and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco | Fast Retailing vs. Ross Stores | Fast Retailing vs. Burlington Stores |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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