Correlation Between Mills Music and Luxfer Holdings

Can any of the company-specific risk be diversified away by investing in both Mills Music and Luxfer Holdings 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 Mills Music and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mills Music Trust and Luxfer Holdings PLC, you can compare the effects of market volatilities on Mills Music and Luxfer Holdings 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 Mills Music with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mills Music and Luxfer Holdings.

Diversification Opportunities for Mills Music and Luxfer Holdings

0.38

Correlation Coefficient

Mills Music  Luxfer Holdings

Weak diversification

The 3 months correlation between Mills and Luxfer is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mills Music Trust and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC and Mills Music 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 Mills Music Trust are associated (or correlated) with Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of Mills Music i.e., Mills Music and Luxfer Holdings go up and down completely randomly.

Pair Corralation between Mills Music and Luxfer Holdings

Assuming the 90 days horizon Mills Music Trust is expected to under-perform the Luxfer Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mills Music Trust is 1.19 times less risky than Luxfer Holdings. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Luxfer Holdings PLC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,313  in Luxfer Holdings PLC on December 28, 2024 and sell it today you would lose (131.00) from holding Luxfer Holdings PLC or give up 9.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mills Music Trust  vs.  Luxfer Holdings PLC

Mills Music Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mills Music Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Luxfer Holdings PLC

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Mills Music and Luxfer Holdings

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

The idea behind Mills Music Trust and Luxfer Holdings PLC 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 Transaction History module to view history of all your transactions and understand their impact on performance.