Correlation Between Luxfer Holdings and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Macmahon Holdings 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 Macmahon Holdings 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 Macmahon Holdings Limited, you can compare the effects of market volatilities on Luxfer Holdings and Macmahon Holdings 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Macmahon Holdings.
Diversification Opportunities for Luxfer Holdings and Macmahon Holdings
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Luxfer and Macmahon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Macmahon Holdings
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.77 times more return on investment than Macmahon Holdings. However, Luxfer Holdings PLC is 1.3 times less risky than Macmahon Holdings. It trades about -0.07 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about -0.22 per unit of risk. If you would invest 1,432 in Luxfer Holdings PLC on September 19, 2024 and sell it today you would lose (48.00) from holding Luxfer Holdings PLC or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Macmahon Holdings |
Luxfer Holdings and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Macmahon Holdings
The main advantage of trading using opposite Luxfer Holdings and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.The idea behind Luxfer Holdings PLC and Macmahon Holdings Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Macmahon Holdings vs. BorgWarner | Macmahon Holdings vs. RCS MediaGroup SpA | Macmahon Holdings vs. Playtika Holding Corp | Macmahon Holdings vs. CarsalesCom Ltd ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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