Correlation Between Park Electrochemical and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical 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 Park Electrochemical and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Luxfer Holdings PLC, you can compare the effects of market volatilities on Park Electrochemical 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 Park Electrochemical with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Luxfer Holdings.
Diversification Opportunities for Park Electrochemical and Luxfer Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and Luxfer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical 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 Park Electrochemical 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 Park Electrochemical 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 Park Electrochemical i.e., Park Electrochemical and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Park Electrochemical and Luxfer Holdings
Considering the 90-day investment horizon Park Electrochemical is expected to under-perform the Luxfer Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Park Electrochemical is 1.88 times less risky than Luxfer Holdings. The stock trades about -0.4 of its potential returns per unit of risk. The Luxfer Holdings PLC is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 1,395 in Luxfer Holdings PLC on November 29, 2024 and sell it today you would lose (109.00) from holding Luxfer Holdings PLC or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Park Electrochemical |
| Luxfer Holdings PLC |
Park Electrochemical and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and Luxfer Holdings
The main advantage of trading using opposite Park Electrochemical and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical 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.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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