Correlation Between Luxfer Holdings and HONEYWELL

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

Diversification Opportunities for Luxfer Holdings and HONEYWELL

0.24

Correlation Coefficient

Luxfer Holdings  HONEYWELL

Modest diversification

The 3 months correlation between Luxfer and HONEYWELL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL 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 HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTERNATIONAL has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and HONEYWELL go up and down completely randomly.

Pair Corralation between Luxfer Holdings and HONEYWELL

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 18.99 times more return on investment than HONEYWELL. However, Luxfer Holdings is 18.99 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about 0.04 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.01 per unit of risk. If you would invest  1,264  in Luxfer Holdings PLC on October 8, 2024 and sell it today you would earn a total of  54.00  from holding Luxfer Holdings PLC or generate 4.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Luxfer Holdings PLC  vs.  HONEYWELL INTERNATIONAL INC

Luxfer Holdings PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 3 (%) 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 current stock price agitation, may contribute to short-term losses for the retail investors.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HONEYWELL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luxfer Holdings and HONEYWELL

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

The idea behind Luxfer Holdings PLC and HONEYWELL INTERNATIONAL INC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.