Correlation Between Luxfer Holdings and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and WPP 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 WPP 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 WPP PLC ADR, you can compare the effects of market volatilities on Luxfer Holdings and WPP 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 WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and WPP PLC.
Diversification Opportunities for Luxfer Holdings and WPP PLC
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luxfer and WPP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR 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 WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC ADR has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and WPP PLC go up and down completely randomly.
Pair Corralation between Luxfer Holdings and WPP PLC
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 1.66 times more return on investment than WPP PLC. However, Luxfer Holdings is 1.66 times more volatile than WPP PLC ADR. It trades about 0.02 of its potential returns per unit of risk. WPP PLC ADR is currently generating about 0.03 per unit of risk. If you would invest 1,310 in Luxfer Holdings PLC on August 29, 2024 and sell it today you would earn a total of 170.00 from holding Luxfer Holdings PLC or generate 12.98% 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. WPP PLC ADR
Performance |
| Timeline |
| Luxfer Holdings PLC |
| WPP PLC ADR |
Luxfer Holdings and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luxfer Holdings and WPP PLC
The main advantage of trading using opposite Luxfer Holdings and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, WPP 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 WPP PLC will offset losses from the drop in WPP PLC's long position.| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Hurco Companies |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |