Correlation Between Luxfer Holdings and 718546AL8

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and 718546AL8 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 718546AL8 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 PHILLIPS 66 4875, you can compare the effects of market volatilities on Luxfer Holdings and 718546AL8 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 718546AL8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and 718546AL8.

Diversification Opportunities for Luxfer Holdings and 718546AL8

-0.75

Correlation Coefficient

Luxfer Holdings  718546AL8

Pay attention - limited upside

The 3 months correlation between Luxfer and 718546AL8 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and PHILLIPS 66 4875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILLIPS 66 4875 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 718546AL8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILLIPS 66 4875 has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and 718546AL8 go up and down completely randomly.

Pair Corralation between Luxfer Holdings and 718546AL8

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 2.46 times more return on investment than 718546AL8. However, Luxfer Holdings is 2.46 times more volatile than PHILLIPS 66 4875. It trades about 0.11 of its potential returns per unit of risk. PHILLIPS 66 4875 is currently generating about -0.05 per unit of risk. If you would invest  1,149  in Luxfer Holdings PLC on September 16, 2024 and sell it today you would earn a total of  214.00  from holding Luxfer Holdings PLC or generate 18.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.31%
Values	Daily Returns

Luxfer Holdings PLC  vs.  PHILLIPS 66 4875

Luxfer Holdings PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

PHILLIPS 66 4875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHILLIPS 66 4875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 718546AL8 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 718546AL8

The main advantage of trading using opposite Luxfer Holdings and 718546AL8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, 718546AL8 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 718546AL8 will offset losses from the drop in 718546AL8's long position.

The idea behind Luxfer Holdings PLC and PHILLIPS 66 4875 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.