Correlation Between MKDWELL Tech and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both MKDWELL Tech and Luxfer Holdings 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 MKDWELL Tech and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MKDWELL Tech Warrants and Luxfer Holdings PLC, you can compare the effects of market volatilities on MKDWELL Tech and Luxfer Holdings 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 MKDWELL Tech with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKDWELL Tech and Luxfer Holdings.
Diversification Opportunities for MKDWELL Tech and Luxfer Holdings
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MKDWELL and Luxfer is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MKDWELL Tech Warrants and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC and MKDWELL Tech 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 MKDWELL Tech Warrants are associated (or correlated) with Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of MKDWELL Tech i.e., MKDWELL Tech and Luxfer Holdings go up and down completely randomly.
Pair Corralation between MKDWELL Tech and Luxfer Holdings
Assuming the 90 days horizon MKDWELL Tech Warrants is expected to generate 12.32 times more return on investment than Luxfer Holdings. However, MKDWELL Tech is 12.32 times more volatile than Luxfer Holdings PLC. It trades about 0.11 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.02 per unit of risk. If you would invest 6.00 in MKDWELL Tech Warrants on September 13, 2024 and sell it today you would lose (3.97) from holding MKDWELL Tech Warrants or give up 66.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 40.61% |
| Values | Daily Returns |
MKDWELL Tech Warrants vs. Luxfer Holdings PLC
Performance |
| Timeline |
| MKDWELL Tech Warrants |
| Luxfer Holdings PLC |
MKDWELL Tech and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MKDWELL Tech and Luxfer Holdings
The main advantage of trading using opposite MKDWELL Tech and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKDWELL Tech position performs unexpectedly, Luxfer Holdings 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 Luxfer Holdings will offset losses from the drop in Luxfer Holdings' long position.| MKDWELL Tech vs. Barnes Group | MKDWELL Tech vs. Babcock Wilcox Enterprises | MKDWELL Tech vs. Crane Company | MKDWELL Tech vs. Hillenbrand |
| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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