Correlation Between Luxfer Holdings and Nextracker
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Nextracker 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 Nextracker 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 Nextracker Class A, you can compare the effects of market volatilities on Luxfer Holdings and Nextracker 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 Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Nextracker.
Diversification Opportunities for Luxfer Holdings and Nextracker
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Luxfer and Nextracker is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A 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 Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Nextracker go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Nextracker
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 1.99 times less return on investment than Nextracker. But when comparing it to its historical volatility, Luxfer Holdings PLC is 1.39 times less risky than Nextracker. It trades about 0.02 of its potential returns per unit of risk. Nextracker Class A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,046 in Nextracker Class A on September 3, 2024 and sell it today you would earn a total of 770.00 from holding Nextracker Class A or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.12% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Nextracker Class A
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Nextracker Class A |
Luxfer Holdings and Nextracker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Nextracker
The main advantage of trading using opposite Luxfer Holdings and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Nextracker 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 Nextracker will offset losses from the drop in Nextracker's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| Nextracker vs. Parker Hannifin | Nextracker vs. Topbuild Corp | Nextracker vs. Newpark Resources | Nextracker vs. Visteon Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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