Correlation Between Luxfer Holdings and Monument Circle
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Monument Circle 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 Monument Circle 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 Monument Circle Acquisition, you can compare the effects of market volatilities on Luxfer Holdings and Monument Circle 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 Monument Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Monument Circle.
Diversification Opportunities for Luxfer Holdings and Monument Circle
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Luxfer and Monument is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Monument Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Circle Acqu 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 Monument Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Circle Acqu has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Monument Circle go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Monument Circle
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.11 times more return on investment than Monument Circle. However, Luxfer Holdings PLC is 9.26 times less risky than Monument Circle. It trades about 0.03 of its potential returns per unit of risk. Monument Circle Acquisition is currently generating about -0.24 per unit of risk. If you would invest 1,191 in Luxfer Holdings PLC on September 12, 2024 and sell it today you would earn a total of 226.00 from holding Luxfer Holdings PLC or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 3.43% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Monument Circle Acquisition
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Monument Circle Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Luxfer Holdings and Monument Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Monument Circle
The main advantage of trading using opposite Luxfer Holdings and Monument Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Monument Circle 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 Monument Circle will offset losses from the drop in Monument Circle's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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