Correlation Between Software Acquisition and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Software Acquisition 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 Software Acquisition and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Acquisition Group and Luxfer Holdings PLC, you can compare the effects of market volatilities on Software Acquisition 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 Software Acquisition with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Acquisition and Luxfer Holdings.
Diversification Opportunities for Software Acquisition and Luxfer Holdings
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Software and Luxfer is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group 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 Software Acquisition 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 Software Acquisition Group 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 Software Acquisition i.e., Software Acquisition and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Software Acquisition and Luxfer Holdings
Assuming the 90 days horizon Software Acquisition Group is expected to generate 12.12 times more return on investment than Luxfer Holdings. However, Software Acquisition is 12.12 times more volatile than Luxfer Holdings PLC. It trades about 0.09 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.15 per unit of risk. If you would invest 2.62 in Software Acquisition Group on September 12, 2024 and sell it today you would lose (1.62) from holding Software Acquisition Group or give up 61.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 70.31% |
| Values | Daily Returns |
Software Acquisition Group vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Software Acquisition |
| Luxfer Holdings PLC |
Software Acquisition and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Acquisition and Luxfer Holdings
The main advantage of trading using opposite Software Acquisition and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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.| Software Acquisition vs. Luxfer Holdings PLC | Software Acquisition vs. Ecovyst | Software Acquisition vs. Codexis | Software Acquisition vs. Eastman Chemical |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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