Correlation Between Luxfer Holdings and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Eldorado Gold 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 Eldorado Gold 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 Eldorado Gold Corp, you can compare the effects of market volatilities on Luxfer Holdings and Eldorado Gold 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 Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Eldorado Gold.
Diversification Opportunities for Luxfer Holdings and Eldorado Gold
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luxfer and Eldorado is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Eldorado Gold go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Eldorado Gold
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 1.11 times more return on investment than Eldorado Gold. However, Luxfer Holdings is 1.11 times more volatile than Eldorado Gold Corp. It trades about 0.18 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.04 per unit of risk. If you would invest 1,069 in Luxfer Holdings PLC on August 28, 2024 and sell it today you would earn a total of 381.00 from holding Luxfer Holdings PLC or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Eldorado Gold Corp
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Eldorado Gold Corp |
Luxfer Holdings and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Eldorado Gold
The main advantage of trading using opposite Luxfer Holdings and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Eldorado Gold 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 Eldorado Gold will offset losses from the drop in Eldorado Gold'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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