Correlation Between Luxfer Holdings and Crane
Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Crane 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 Crane 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 Crane Company, you can compare the effects of market volatilities on Luxfer Holdings and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Crane.
Diversification Opportunities for Luxfer Holdings and Crane
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luxfer and Crane is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Crane go up and down completely randomly.
Pair Corralation between Luxfer Holdings and Crane
Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the Crane. In addition to that, Luxfer Holdings is 1.32 times more volatile than Crane Company. It trades about -0.14 of its total potential returns per unit of risk. Crane Company is currently generating about -0.14 per unit of volatility. If you would invest 17,853 in Crane Company on September 11, 2024 and sell it today you would lose (821.00) from holding Crane Company or give up 4.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Luxfer Holdings PLC vs. Crane Company
Performance |
Timeline |
Luxfer Holdings PLC |
Crane Company |
Luxfer Holdings and Crane Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Luxfer Holdings and Crane
The main advantage of trading using opposite Luxfer Holdings and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
Crane vs. Helios Technologies | Crane vs. Enpro Industries | Crane vs. Omega Flex | Crane vs. Luxfer Holdings PLC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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