Correlation Between Lincoln Electric and Evertz Technologies

Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Evertz Technologies 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 Lincoln Electric and Evertz Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lincoln Electric Holdings and Evertz Technologies Limited, you can compare the effects of market volatilities on Lincoln Electric and Evertz Technologies 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 Lincoln Electric with a short position of Evertz Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Evertz Technologies.

Diversification Opportunities for Lincoln Electric and Evertz Technologies

-0.31

Correlation Coefficient

Lincoln Electric  Evertz Technologies

Very good diversification

The 3 months correlation between Lincoln and Evertz is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies and Lincoln Electric 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 Lincoln Electric Holdings are associated (or correlated) with Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Evertz Technologies go up and down completely randomly.

Pair Corralation between Lincoln Electric and Evertz Technologies

Given the investment horizon of 90 days Lincoln Electric Holdings is expected to under-perform the Evertz Technologies. In addition to that, Lincoln Electric is 61.72 times more volatile than Evertz Technologies Limited. It trades about -0.13 of its total potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.21 per unit of volatility. If you would invest  868.00  in Evertz Technologies Limited on September 12, 2024 and sell it today you would lose (1.00) from holding Evertz Technologies Limited or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Lincoln Electric Holdings  vs.  Evertz Technologies Limited

Lincoln Electric Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Lincoln Electric displayed solid returns over the last few months and may actually be approaching a breakup point.

Evertz Technologies

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evertz Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lincoln Electric and Evertz Technologies

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

The idea behind Lincoln Electric Holdings and Evertz Technologies Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.