Correlation Between Luxfer Holdings and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Q2 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 Luxfer Holdings and Q2 Holdings 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 Q2 Holdings, you can compare the effects of market volatilities on Luxfer Holdings and Q2 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 Luxfer Holdings with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Q2 Holdings.

Diversification Opportunities for Luxfer Holdings and Q2 Holdings

0.16

Correlation Coefficient

Luxfer Holdings  Q2 Holdings

Average diversification

The 3 months correlation between Luxfer and QTWO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings 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 Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Q2 Holdings go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Q2 Holdings

Given the investment horizon of 90 days Luxfer Holdings is expected to generate 71.87 times less return on investment than Q2 Holdings. In addition to that, Luxfer Holdings is 1.01 times more volatile than Q2 Holdings. It trades about 0.0 of its total potential returns per unit of risk. Q2 Holdings is currently generating about 0.12 per unit of volatility. If you would invest  2,087  in Q2 Holdings on December 2, 2024 and sell it today you would earn a total of  6,650  from holding Q2 Holdings or generate 318.64% return on investment over 90 days.

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

Luxfer Holdings PLC  vs.  Q2 Holdings

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Q2 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q2 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Luxfer Holdings and Q2 Holdings

The main advantage of trading using opposite Luxfer Holdings and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Q2 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind Luxfer Holdings PLC and Q2 Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.