Correlation Between Luxfer Holdings and CSW Industrials
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and CSW Industrials 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 CSW Industrials 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 CSW Industrials, you can compare the effects of market volatilities on Luxfer Holdings and CSW Industrials 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 CSW Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and CSW Industrials.
Diversification Opportunities for Luxfer Holdings and CSW Industrials
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luxfer and CSW is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and CSW Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSW Industrials 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 CSW Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSW Industrials has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and CSW Industrials go up and down completely randomly.
Pair Corralation between Luxfer Holdings and CSW Industrials
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 6.49 times less return on investment than CSW Industrials. In addition to that, Luxfer Holdings is 1.38 times more volatile than CSW Industrials. It trades about 0.02 of its total potential returns per unit of risk. CSW Industrials is currently generating about 0.14 per unit of volatility. If you would invest 12,106 in CSW Industrials on August 23, 2024 and sell it today you would earn a total of 29,460 from holding CSW Industrials or generate 243.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. CSW Industrials
Performance |
| Timeline |
| Luxfer Holdings PLC |
| CSW Industrials |
Luxfer Holdings and CSW Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and CSW Industrials
The main advantage of trading using opposite Luxfer Holdings and CSW Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, CSW Industrials 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 CSW Industrials will offset losses from the drop in CSW Industrials' long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. John Bean Technologies | CSW Industrials vs. ITT Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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