Correlation Between Luxfer Holdings and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on Luxfer Holdings and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and PennantPark Investment.
Diversification Opportunities for Luxfer Holdings and PennantPark Investment
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Luxfer and PennantPark is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and PennantPark Investment go up and down completely randomly.
Pair Corralation between Luxfer Holdings and PennantPark Investment
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 2.66 times more return on investment than PennantPark Investment. However, Luxfer Holdings is 2.66 times more volatile than PennantPark Investment. It trades about 0.09 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.06 per unit of risk. If you would invest 855.00 in Luxfer Holdings PLC on September 3, 2024 and sell it today you would earn a total of 625.00 from holding Luxfer Holdings PLC or generate 73.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. PennantPark Investment
Performance |
| Timeline |
| Luxfer Holdings PLC |
| PennantPark Investment |
Luxfer Holdings and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and PennantPark Investment
The main advantage of trading using opposite Luxfer Holdings and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| PennantPark Investment vs. Sixth Street Specialty | PennantPark Investment vs. New Mountain Finance | PennantPark Investment vs. Carlyle Secured Lending | PennantPark Investment vs. BlackRock TCP Capital |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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