Correlation Between Precision Drilling and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Precision Drilling 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 Precision Drilling and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Luxfer Holdings PLC, you can compare the effects of market volatilities on Precision Drilling 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 Precision Drilling with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Luxfer Holdings.
Diversification Opportunities for Precision Drilling and Luxfer Holdings
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precision and Luxfer is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling 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 Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Precision Drilling and Luxfer Holdings
Considering the 90-day investment horizon Precision Drilling is expected to generate 1.15 times more return on investment than Luxfer Holdings. However, Precision Drilling is 1.15 times more volatile than Luxfer Holdings PLC. It trades about 0.07 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about -0.03 per unit of risk. If you would invest 6,117 in Precision Drilling on August 31, 2024 and sell it today you would earn a total of 200.00 from holding Precision Drilling or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Precision Drilling |
| Luxfer Holdings PLC |
Precision Drilling and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Luxfer Holdings
The main advantage of trading using opposite Precision Drilling and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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.| Precision Drilling vs. Nabors Industries | Precision Drilling vs. Patterson UTI Energy | Precision Drilling vs. Noble plc | Precision Drilling vs. Helmerich and Payne |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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