Correlation Between Luxfer Holdings and Bank of America
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Bank of America 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 Luxfer Holdings and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luxfer Holdings PLC and Bank of America, you can compare the effects of market volatilities on Luxfer Holdings and Bank of America 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 Luxfer Holdings with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Bank of America.
Diversification Opportunities for Luxfer Holdings and Bank of America
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luxfer and Bank is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Luxfer Holdings 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 Luxfer Holdings PLC are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Bank of America go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Bank of America
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 2.65 times more return on investment than Bank of America. However, Luxfer Holdings is 2.65 times more volatile than Bank of America. It trades about 0.04 of its potential returns per unit of risk. Bank of America is currently generating about 0.09 per unit of risk. If you would invest 1,459 in Luxfer Holdings PLC on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Luxfer Holdings PLC or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Bank of America
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Bank of America |
Luxfer Holdings and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Bank of America
The main advantage of trading using opposite Luxfer Holdings and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Bank of America | Bank of America vs. China Construction Bank |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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