Correlation Between Luxfer Holdings and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on Luxfer Holdings and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and ServiceNow.
Diversification Opportunities for Luxfer Holdings and ServiceNow
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luxfer and ServiceNow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and ServiceNow go up and down completely randomly.
Pair Corralation between Luxfer Holdings and ServiceNow
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 8.51 times less return on investment than ServiceNow. In addition to that, Luxfer Holdings is 1.32 times more volatile than ServiceNow. It trades about 0.01 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.1 per unit of volatility. If you would invest 46,330 in ServiceNow on September 1, 2024 and sell it today you would earn a total of 58,614 from holding ServiceNow or generate 126.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. ServiceNow
Performance |
| Timeline |
| Luxfer Holdings PLC |
| ServiceNow |
Luxfer Holdings and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and ServiceNow
The main advantage of trading using opposite Luxfer Holdings and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| ServiceNow vs. Datadog | ServiceNow vs. Gitlab Inc | ServiceNow vs. Atlassian Corp Plc | ServiceNow vs. HubSpot |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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