Correlation Between Sable Offshore and Luxfer Holdings

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

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

Diversification Opportunities for Sable Offshore and Luxfer Holdings

-0.06

Correlation Coefficient

Sable Offshore  Luxfer Holdings

Good diversification

The 3 months correlation between Sable and Luxfer is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore 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 Sable Offshore 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 Sable Offshore 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 Sable Offshore i.e., Sable Offshore and Luxfer Holdings go up and down completely randomly.

Pair Corralation between Sable Offshore and Luxfer Holdings

Considering the 90-day investment horizon Sable Offshore Corp is expected to under-perform the Luxfer Holdings. In addition to that, Sable Offshore is 1.92 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 0.06 per unit of volatility. If you would invest  1,253  in Luxfer Holdings PLC on September 17, 2024 and sell it today you would earn a total of  110.00  from holding Luxfer Holdings PLC or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sable Offshore Corp  vs.  Luxfer Holdings PLC

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Luxfer Holdings PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 4 (%) 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 Sable Offshore and Luxfer Holdings

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

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.