Correlation Between Lincoln Electric and Inflection Point

Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Inflection Point 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 Inflection Point 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 Inflection Point Acquisition, you can compare the effects of market volatilities on Lincoln Electric and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Inflection Point.

Diversification Opportunities for Lincoln Electric and Inflection Point

0.03

Correlation Coefficient

Lincoln Electric  Inflection Point

Significant diversification

The 3 months correlation between Lincoln and Inflection is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Inflection Point go up and down completely randomly.

Pair Corralation between Lincoln Electric and Inflection Point

Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 0.45 times more return on investment than Inflection Point. However, Lincoln Electric Holdings is 2.25 times less risky than Inflection Point. It trades about 0.02 of its potential returns per unit of risk. Inflection Point Acquisition is currently generating about -0.07 per unit of risk. If you would invest  18,880  in Lincoln Electric Holdings on December 22, 2024 and sell it today you would earn a total of  322.00  from holding Lincoln Electric Holdings or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Lincoln Electric Holdings  vs.  Inflection Point Acquisition

Lincoln Electric Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Lincoln Electric is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Inflection Point Acq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inflection Point Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lincoln Electric and Inflection Point

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

The idea behind Lincoln Electric Holdings and Inflection Point Acquisition 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.