Correlation Between Luxfer Holdings and Sabre Insurance

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

Diversification Opportunities for Luxfer Holdings and Sabre Insurance

0.0

Correlation Coefficient

Luxfer Holdings  Sabre Insurance

Pay attention - limited upside

The 3 months correlation between Luxfer and Sabre is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Sabre Insurance go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Sabre Insurance

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 10.22 times more return on investment than Sabre Insurance. However, Luxfer Holdings is 10.22 times more volatile than Sabre Insurance Group. It trades about 0.08 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.08 per unit of risk. If you would invest  806.00  in Luxfer Holdings PLC on October 6, 2024 and sell it today you would earn a total of  506.00  from holding Luxfer Holdings PLC or generate 62.78% return on investment over 90 days.

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

Luxfer Holdings PLC  vs.  Sabre Insurance Group

Luxfer Holdings PLC

Risk-Adjusted Performance

2 of 100

Weak

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luxfer Holdings and Sabre Insurance

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

The idea behind Luxfer Holdings PLC and Sabre Insurance Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.