Correlation Between Luxfer Holdings and Gorman Rupp
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Gorman Rupp 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 Gorman Rupp 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 Gorman Rupp, you can compare the effects of market volatilities on Luxfer Holdings and Gorman Rupp 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 Gorman Rupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Gorman Rupp.
Diversification Opportunities for Luxfer Holdings and Gorman Rupp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luxfer and Gorman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Gorman Rupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gorman Rupp 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 Gorman Rupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gorman Rupp has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Gorman Rupp go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Gorman Rupp
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 1.42 times more return on investment than Gorman Rupp. However, Luxfer Holdings is 1.42 times more volatile than Gorman Rupp. It trades about 0.13 of its potential returns per unit of risk. Gorman Rupp is currently generating about 0.19 per unit of risk. If you would invest 1,272 in Luxfer Holdings PLC on August 23, 2024 and sell it today you would earn a total of 126.00 from holding Luxfer Holdings PLC or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Gorman Rupp
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Gorman Rupp |
Luxfer Holdings and Gorman Rupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Gorman Rupp
The main advantage of trading using opposite Luxfer Holdings and Gorman Rupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Gorman Rupp 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 Gorman Rupp will offset losses from the drop in Gorman Rupp's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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