Correlation Between Luxfer Holdings and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Bowhead Specialty 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 Bowhead Specialty 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 Bowhead Specialty Holdings, you can compare the effects of market volatilities on Luxfer Holdings and Bowhead Specialty 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 Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Bowhead Specialty.
Diversification Opportunities for Luxfer Holdings and Bowhead Specialty
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Luxfer and Bowhead is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty 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 Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Bowhead Specialty
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 8.99 times less return on investment than Bowhead Specialty. In addition to that, Luxfer Holdings is 1.19 times more volatile than Bowhead Specialty Holdings. It trades about 0.01 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.1 per unit of volatility. If you would invest 2,380 in Bowhead Specialty Holdings on November 9, 2024 and sell it today you would earn a total of 999.00 from holding Bowhead Specialty Holdings or generate 41.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 35.9% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Bowhead Specialty |
Luxfer Holdings and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Bowhead Specialty
The main advantage of trading using opposite Luxfer Holdings and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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