Correlation Between Luxfer Holdings and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Microchip Technology 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 Microchip Technology 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 Microchip Technology, you can compare the effects of market volatilities on Luxfer Holdings and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Microchip Technology.
Diversification Opportunities for Luxfer Holdings and Microchip Technology
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luxfer and Microchip is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Microchip Technology go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Microchip Technology
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 1.24 times more return on investment than Microchip Technology. However, Luxfer Holdings is 1.24 times more volatile than Microchip Technology. It trades about 0.17 of its potential returns per unit of risk. Microchip Technology is currently generating about -0.1 per unit of risk. If you would invest 1,076 in Luxfer Holdings PLC on August 29, 2024 and sell it today you would earn a total of 358.00 from holding Luxfer Holdings PLC or generate 33.27% 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. Microchip Technology
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Microchip Technology |
Luxfer Holdings and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Microchip Technology
The main advantage of trading using opposite Luxfer Holdings and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Hurco Companies |
| Microchip Technology vs. Micron Technology | Microchip Technology vs. ABIVAX Socit Anonyme | Microchip Technology vs. Morningstar Unconstrained Allocation | Microchip Technology vs. SPACE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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