Correlation Between Luxfer Holdings and TRAVELERS

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and TRAVELERS 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 TRAVELERS 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 TRAVELERS INC 46, you can compare the effects of market volatilities on Luxfer Holdings and TRAVELERS 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 TRAVELERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and TRAVELERS.

Diversification Opportunities for Luxfer Holdings and TRAVELERS

-0.42

Correlation Coefficient

Luxfer Holdings  TRAVELERS

Very good diversification

The 3 months correlation between Luxfer and TRAVELERS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and TRAVELERS INC 46 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVELERS INC 46 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 TRAVELERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVELERS INC 46 has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and TRAVELERS go up and down completely randomly.

Pair Corralation between Luxfer Holdings and TRAVELERS

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the TRAVELERS. But the stock apears to be less risky and, when comparing its historical volatility, Luxfer Holdings PLC is 1.5 times less risky than TRAVELERS. The stock trades about -0.22 of its potential returns per unit of risk. The TRAVELERS INC 46 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,291  in TRAVELERS INC 46 on October 9, 2024 and sell it today you would earn a total of  150.00  from holding TRAVELERS INC 46 or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.95%
Values	Daily Returns

Luxfer Holdings PLC  vs.  TRAVELERS INC 46

Luxfer Holdings PLC

Risk-Adjusted Performance

2 of 100

Insignificant

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

TRAVELERS INC 46

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVELERS INC 46 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TRAVELERS 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 TRAVELERS

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

The idea behind Luxfer Holdings PLC and TRAVELERS INC 46 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.