Correlation Between Luxfer Holdings and Summit Therapeutics
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Summit Therapeutics 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 Summit Therapeutics 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 Summit Therapeutics PLC, you can compare the effects of market volatilities on Luxfer Holdings and Summit Therapeutics 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 Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Summit Therapeutics.
Diversification Opportunities for Luxfer Holdings and Summit Therapeutics
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Luxfer and Summit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics 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 Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Summit Therapeutics go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Summit Therapeutics
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 2.02 times less return on investment than Summit Therapeutics. But when comparing it to its historical volatility, Luxfer Holdings PLC is 3.18 times less risky than Summit Therapeutics. It trades about 0.22 of its potential returns per unit of risk. Summit Therapeutics PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,747 in Summit Therapeutics PLC on November 5, 2024 and sell it today you would earn a total of 251.00 from holding Summit Therapeutics PLC or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Summit Therapeutics PLC
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Summit Therapeutics PLC |
Luxfer Holdings and Summit Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Summit Therapeutics
The main advantage of trading using opposite Luxfer Holdings and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Summit Therapeutics 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 Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
| Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |