Correlation Between GEN Restaurant and Luxfer Holdings

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

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

Diversification Opportunities for GEN Restaurant and Luxfer Holdings

0.34

Correlation Coefficient

GEN Restaurant  Luxfer Holdings

Weak diversification

The 3 months correlation between GEN and Luxfer is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, 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 GEN Restaurant 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 GEN Restaurant Group, 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 GEN Restaurant i.e., GEN Restaurant and Luxfer Holdings go up and down completely randomly.

Pair Corralation between GEN Restaurant and Luxfer Holdings

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the Luxfer Holdings. In addition to that, GEN Restaurant is 1.44 times more volatile than Luxfer Holdings PLC. It trades about -0.03 of its total potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.04 per unit of volatility. If you would invest  1,244  in Luxfer Holdings PLC on October 1, 2024 and sell it today you would earn a total of  65.00  from holding Luxfer Holdings PLC or generate 5.23% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  Luxfer Holdings PLC

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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 unfluctuating technical and fundamental indicators, Luxfer Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GEN Restaurant and Luxfer Holdings

The main advantage of trading using opposite GEN Restaurant and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant 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 GEN Restaurant Group, 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.