Correlation Between Luxfer Holdings and Dow
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Dow 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 Dow 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 Dow Inc, you can compare the effects of market volatilities on Luxfer Holdings and Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Dow.
Diversification Opportunities for Luxfer Holdings and Dow
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luxfer and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Dow go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Dow
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 2.32 times more return on investment than Dow. However, Luxfer Holdings is 2.32 times more volatile than Dow Inc. It trades about 0.16 of its potential returns per unit of risk. Dow Inc is currently generating about -0.26 per unit of risk. If you would invest 1,286 in Luxfer Holdings PLC on August 28, 2024 and sell it today you would earn a total of 148.00 from holding Luxfer Holdings PLC or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Dow Inc
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Dow Inc |
Luxfer Holdings and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Dow
The main advantage of trading using opposite Luxfer Holdings and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Dow 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 Dow will offset losses from the drop in Dow's long position.| Luxfer Holdings vs. Aquagold International | Luxfer Holdings vs. Morningstar Unconstrained Allocation | Luxfer Holdings vs. High Yield Municipal Fund | Luxfer Holdings vs. Thrivent High Yield |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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