Correlation Between Taylor Devices and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both Taylor Devices 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 Taylor Devices and Luxfer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taylor Devices and Luxfer Holdings PLC, you can compare the effects of market volatilities on Taylor Devices 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 Taylor Devices with a short position of Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Devices and Luxfer Holdings.
Diversification Opportunities for Taylor Devices and Luxfer Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Taylor and Luxfer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Devices 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 Taylor Devices 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 Taylor Devices 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 Taylor Devices i.e., Taylor Devices and Luxfer Holdings go up and down completely randomly.
Pair Corralation between Taylor Devices and Luxfer Holdings
Given the investment horizon of 90 days Taylor Devices is expected to generate 0.8 times more return on investment than Luxfer Holdings. However, Taylor Devices is 1.25 times less risky than Luxfer Holdings. It trades about 0.02 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about -0.17 per unit of risk. If you would invest 3,344 in Taylor Devices on December 3, 2024 and sell it today you would earn a total of 13.00 from holding Taylor Devices or generate 0.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
Taylor Devices vs. Luxfer Holdings PLC
Performance |
Timeline |
Taylor Devices |
Luxfer Holdings PLC |
Taylor Devices and Luxfer Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taylor Devices and Luxfer Holdings
The main advantage of trading using opposite Taylor Devices and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Devices 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.Taylor Devices vs. Tennant Company | Taylor Devices vs. Kadant Inc | Taylor Devices vs. Enpro Industries | Taylor Devices vs. Luxfer Holdings PLC |
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Check out your portfolio center.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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