Correlation Between Luxfer Holdings and PENSKE

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and PENSKE 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 PENSKE 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 PENSKE 57 01 FEB 28, you can compare the effects of market volatilities on Luxfer Holdings and PENSKE 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 PENSKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and PENSKE.

Diversification Opportunities for Luxfer Holdings and PENSKE

-0.34

Correlation Coefficient

Luxfer Holdings  PENSKE

Very good diversification

The 3 months correlation between Luxfer and PENSKE is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and PENSKE 57 01 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENSKE 57 01 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 PENSKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENSKE 57 01 has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and PENSKE go up and down completely randomly.

Pair Corralation between Luxfer Holdings and PENSKE

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 8.43 times more return on investment than PENSKE. However, Luxfer Holdings is 8.43 times more volatile than PENSKE 57 01 FEB 28. It trades about 0.04 of its potential returns per unit of risk. PENSKE 57 01 FEB 28 is currently generating about -0.21 per unit of risk. If you would invest  1,258  in Luxfer Holdings PLC on September 26, 2024 and sell it today you would earn a total of  52.00  from holding Luxfer Holdings PLC or generate 4.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.08%
Values	Daily Returns

Luxfer Holdings PLC  vs.  PENSKE 57 01 FEB 28

Luxfer Holdings PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Luxfer Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

PENSKE 57 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENSKE 57 01 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PENSKE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luxfer Holdings and PENSKE

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

The idea behind Luxfer Holdings PLC and PENSKE 57 01 FEB 28 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.