Correlation Between Luxfer Holdings and Nova Minerals

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

Diversification Opportunities for Luxfer Holdings and Nova Minerals

0.14

Correlation Coefficient

Luxfer Holdings  Nova Minerals

Average diversification

The 3 months correlation between Luxfer and Nova is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Nova Minerals go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Nova Minerals

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.23 times more return on investment than Nova Minerals. However, Luxfer Holdings PLC is 4.32 times less risky than Nova Minerals. It trades about -0.08 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about -0.04 per unit of risk. If you would invest  1,313  in Luxfer Holdings PLC on December 28, 2024 and sell it today you would lose (157.00) from holding Luxfer Holdings PLC or give up 11.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Luxfer Holdings PLC  vs.  Nova Minerals Limited

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.

Nova Minerals Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nova Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Luxfer Holdings and Nova Minerals

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

The idea behind Luxfer Holdings PLC and Nova Minerals Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.