Correlation Between Luxfer Holdings and Tennant
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Tennant 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 Tennant 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 Tennant Company, you can compare the effects of market volatilities on Luxfer Holdings and Tennant 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 Tennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Tennant.
Diversification Opportunities for Luxfer Holdings and Tennant
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luxfer and Tennant is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Tennant Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tennant Company 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 Tennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tennant Company has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Tennant go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Tennant
Given the investment horizon of 90 days Luxfer Holdings is expected to generate 1.67 times less return on investment than Tennant. In addition to that, Luxfer Holdings is 1.46 times more volatile than Tennant Company. It trades about 0.02 of its total potential returns per unit of risk. Tennant Company is currently generating about 0.05 per unit of volatility. If you would invest 6,270 in Tennant Company on August 27, 2024 and sell it today you would earn a total of 2,699 from holding Tennant Company or generate 43.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luxfer Holdings PLC vs. Tennant Company
Performance |
| Timeline |
| Luxfer Holdings PLC |
| Tennant Company |
Luxfer Holdings and Tennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and Tennant
The main advantage of trading using opposite Luxfer Holdings and Tennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Tennant 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 Tennant will offset losses from the drop in Tennant's long position.| Luxfer Holdings vs. Aquagold International | Luxfer Holdings vs. Morningstar Unconstrained Allocation | Luxfer Holdings vs. High Yield Municipal Fund | Luxfer Holdings vs. Thrivent High Yield |
| Tennant vs. Aquagold International | Tennant vs. Morningstar Unconstrained Allocation | Tennant vs. High Yield Municipal Fund | Tennant vs. Thrivent High Yield |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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