Correlation Between Luxfer Holdings and Global Lights
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Global Lights 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 Global Lights 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 Global Lights Acquisition, you can compare the effects of market volatilities on Luxfer Holdings and Global Lights 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 Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Global Lights.
Diversification Opportunities for Luxfer Holdings and Global Lights
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luxfer and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Global Lights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Lights Acquisition 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 Global Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Lights Acquisition has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Global Lights go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Global Lights
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 7.75 times more return on investment than Global Lights. However, Luxfer Holdings is 7.75 times more volatile than Global Lights Acquisition. It trades about 0.02 of its potential returns per unit of risk. Global Lights Acquisition is currently generating about 0.06 per unit of risk. If you would invest 1,316 in Luxfer Holdings PLC on September 12, 2024 and sell it today you would earn a total of 101.00 from holding Luxfer Holdings PLC or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.7% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Global Lights Acquisition
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Global Lights Acquisition |
Luxfer Holdings and Global Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Global Lights
The main advantage of trading using opposite Luxfer Holdings and Global Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Global Lights 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 Global Lights will offset losses from the drop in Global Lights' long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| Global Lights vs. HUMANA INC | Global Lights vs. Barloworld Ltd ADR | Global Lights vs. Morningstar Unconstrained Allocation | Global Lights 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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