Correlation Between Teleflex Incorporated and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Teleflex Incorporated 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 Teleflex Incorporated and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teleflex Incorporated and Luxfer Holdings PLC, you can compare the effects of market volatilities on Teleflex Incorporated 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 Teleflex Incorporated with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teleflex Incorporated and Luxfer Holdings.
Diversification Opportunities for Teleflex Incorporated and Luxfer Holdings
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Teleflex and Luxfer is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Teleflex Incorporated and Luxfer Holdings
Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Luxfer Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Teleflex Incorporated is 1.07 times less risky than Luxfer Holdings. The stock trades about -0.21 of its potential returns per unit of risk. The Luxfer Holdings PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Luxfer Holdings PLC on August 28, 2024 and sell it today you would earn a total of 159.00 from holding Luxfer Holdings PLC or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teleflex Incorporated vs. Luxfer Holdings PLC
Performance |
| Timeline |
| Teleflex Incorporated |
| Luxfer Holdings PLC |
Teleflex Incorporated and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teleflex Incorporated and Luxfer Holdings
The main advantage of trading using opposite Teleflex Incorporated and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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.The idea behind Teleflex Incorporated and Luxfer Holdings PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Luxfer Holdings vs. Aquagold International | Luxfer Holdings vs. Morningstar Unconstrained Allocation | Luxfer Holdings vs. High Yield Municipal Fund | Luxfer Holdings vs. Thrivent High Yield |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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