Correlation Between Luxfer Holdings and BranchOut Food

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and BranchOut Food 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 Luxfer Holdings and BranchOut Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Luxfer Holdings PLC and BranchOut Food Common, you can compare the effects of market volatilities on Luxfer Holdings and BranchOut Food 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 Luxfer Holdings with a short position of BranchOut Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and BranchOut Food.

Diversification Opportunities for Luxfer Holdings and BranchOut Food

0.39

Correlation Coefficient

Luxfer Holdings  BranchOut Food

Weak diversification

The 3 months correlation between Luxfer and BranchOut is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and BranchOut Food Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BranchOut Food Common and Luxfer Holdings 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 Luxfer Holdings PLC are associated (or correlated) with BranchOut Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BranchOut Food Common has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and BranchOut Food go up and down completely randomly.

Pair Corralation between Luxfer Holdings and BranchOut Food

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the BranchOut Food. But the stock apears to be less risky and, when comparing its historical volatility, Luxfer Holdings PLC is 2.2 times less risky than BranchOut Food. The stock trades about -0.22 of its potential returns per unit of risk. The BranchOut Food Common is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  190.00  in BranchOut Food Common on October 9, 2024 and sell it today you would earn a total of  2.00  from holding BranchOut Food Common or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Luxfer Holdings PLC  vs.  BranchOut Food Common

Luxfer Holdings PLC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Luxfer Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

BranchOut Food Common

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BranchOut Food Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BranchOut Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Luxfer Holdings and BranchOut Food

The main advantage of trading using opposite Luxfer Holdings and BranchOut Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, BranchOut Food 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 BranchOut Food will offset losses from the drop in BranchOut Food's long position.

The idea behind Luxfer Holdings PLC and BranchOut Food Common 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.