Correlation Between Luxfer Holdings and CONSOLIDATED

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

Diversification Opportunities for Luxfer Holdings and CONSOLIDATED

0.09

Correlation Coefficient

Luxfer Holdings  CONSOLIDATED

Significant diversification

The 3 months correlation between Luxfer and CONSOLIDATED is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Luxfer Holdings and CONSOLIDATED

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the CONSOLIDATED. But the stock apears to be less risky and, when comparing its historical volatility, Luxfer Holdings PLC is 1.3 times less risky than CONSOLIDATED. The stock trades about -0.32 of its potential returns per unit of risk. The CONSOLIDATED EDISON N is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,970  in CONSOLIDATED EDISON N on October 12, 2024 and sell it today you would earn a total of  272.00  from holding CONSOLIDATED EDISON N or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Luxfer Holdings PLC  vs.  CONSOLIDATED EDISON N

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.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSOLIDATED is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luxfer Holdings and CONSOLIDATED

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

The idea behind Luxfer Holdings PLC and CONSOLIDATED EDISON N 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.