Correlation Between Luxfer Holdings and Entravision Communications

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Entravision Communications 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 Entravision Communications 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 Entravision Communications, you can compare the effects of market volatilities on Luxfer Holdings and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Entravision Communications.

Diversification Opportunities for Luxfer Holdings and Entravision Communications

0.26

Correlation Coefficient

Luxfer Holdings  Entravision Communications

Modest diversification

The 3 months correlation between Luxfer and Entravision is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Entravision Communications go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Entravision Communications

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the Entravision Communications. But the stock apears to be less risky and, when comparing its historical volatility, Luxfer Holdings PLC is 2.25 times less risky than Entravision Communications. The stock trades about -0.08 of its potential returns per unit of risk. The Entravision Communications is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Entravision Communications on December 30, 2024 and sell it today you would lose (18.00) from holding Entravision Communications or give up 7.93% of portfolio value over 90 days.

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

Luxfer Holdings PLC  vs.  Entravision Communications

Luxfer Holdings PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Luxfer Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Entravision Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entravision Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Entravision Communications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Luxfer Holdings and Entravision Communications

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

The idea behind Luxfer Holdings PLC and Entravision Communications 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.