Correlation Between Luxfer Holdings and IAGLN

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and IAGLN 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 IAGLN 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 IAGLN 425 15 NOV 32, you can compare the effects of market volatilities on Luxfer Holdings and IAGLN 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 IAGLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and IAGLN.

Diversification Opportunities for Luxfer Holdings and IAGLN

0.31

Correlation Coefficient

Luxfer Holdings  IAGLN

Weak diversification

The 3 months correlation between Luxfer and IAGLN is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and IAGLN 425 15 NOV 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAGLN 425 15 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 IAGLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAGLN 425 15 has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and IAGLN go up and down completely randomly.

Pair Corralation between Luxfer Holdings and IAGLN

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the IAGLN. But the stock apears to be less risky and, when comparing its historical volatility, Luxfer Holdings PLC is 1.65 times less risky than IAGLN. The stock trades about -0.34 of its potential returns per unit of risk. The IAGLN 425 15 NOV 32 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9,038  in IAGLN 425 15 NOV 32 on October 11, 2024 and sell it today you would earn a total of  262.00  from holding IAGLN 425 15 NOV 32 or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.57%
Values	Daily Returns

Luxfer Holdings PLC  vs.  IAGLN 425 15 NOV 32

Luxfer Holdings PLC

Risk-Adjusted Performance

0 of 100

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 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.

IAGLN 425 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAGLN 425 15 NOV 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for IAGLN 425 15 NOV 32 investors.

Pair Trading with Luxfer Holdings and IAGLN

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

The idea behind Luxfer Holdings PLC and IAGLN 425 15 NOV 32 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.