Correlation Between Luxfer Holdings and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Pentair PLC 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 Pentair PLC 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 Pentair PLC, you can compare the effects of market volatilities on Luxfer Holdings and Pentair PLC 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 Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Pentair PLC.
Diversification Opportunities for Luxfer Holdings and Pentair PLC
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luxfer and Pentair is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC 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 Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Pentair PLC go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Pentair PLC
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the Pentair PLC. In addition to that, Luxfer Holdings is 2.41 times more volatile than Pentair PLC. It trades about -0.17 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.22 per unit of volatility. If you would invest 10,408 in Pentair PLC on September 13, 2024 and sell it today you would earn a total of 421.00 from holding Pentair PLC or generate 4.04% 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. Pentair PLC
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Pentair PLC |
Luxfer Holdings and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Pentair PLC
The main advantage of trading using opposite Luxfer Holdings and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Pentair PLC 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 Pentair PLC will offset losses from the drop in Pentair PLC's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| Pentair PLC vs. Hurco Companies | Pentair PLC vs. Enerpac Tool Group | Pentair PLC vs. China Yuchai International | Pentair PLC vs. Luxfer Holdings PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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