Correlation Between Joint Corp and Luxfer Holdings

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

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

Diversification Opportunities for Joint Corp and Luxfer Holdings

0.28

Correlation Coefficient

Joint Corp  Luxfer Holdings

Modest diversification

The 3 months correlation between Joint and Luxfer is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding The Joint Corp 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 Joint Corp 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 The Joint Corp 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 Joint Corp i.e., Joint Corp and Luxfer Holdings go up and down completely randomly.

Pair Corralation between Joint Corp and Luxfer Holdings

Given the investment horizon of 90 days Joint Corp is expected to generate 3.46 times less return on investment than Luxfer Holdings. In addition to that, Joint Corp is 1.02 times more volatile than Luxfer Holdings PLC. It trades about 0.04 of its total potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.14 per unit of volatility. If you would invest  1,141  in Luxfer Holdings PLC on September 3, 2024 and sell it today you would earn a total of  295.00  from holding Luxfer Holdings PLC or generate 25.85% return on investment over 90 days.

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

The Joint Corp  vs.  Luxfer Holdings PLC

Joint Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Joint Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Joint Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Luxfer Holdings PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joint Corp and Luxfer Holdings

The main advantage of trading using opposite Joint Corp and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Corp 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 The Joint Corp 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.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.