Correlation Between Lincoln Electric and Nuvalent
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Nuvalent 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 Nuvalent 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 Nuvalent, you can compare the effects of market volatilities on Lincoln Electric and Nuvalent 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 Nuvalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Nuvalent.
Diversification Opportunities for Lincoln Electric and Nuvalent
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lincoln and Nuvalent is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Nuvalent go up and down completely randomly.
Pair Corralation between Lincoln Electric and Nuvalent
Given the investment horizon of 90 days Lincoln Electric is expected to generate 41.53 times less return on investment than Nuvalent. But when comparing it to its historical volatility, Lincoln Electric Holdings is 1.82 times less risky than Nuvalent. It trades about 0.0 of its potential returns per unit of risk. Nuvalent is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,803 in Nuvalent on October 11, 2024 and sell it today you would earn a total of 2,022 from holding Nuvalent or generate 34.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lincoln Electric Holdings vs. Nuvalent
Performance |
Timeline |
Lincoln Electric Holdings |
Nuvalent |
Lincoln Electric and Nuvalent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lincoln Electric and Nuvalent
The main advantage of trading using opposite Lincoln Electric and Nuvalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Nuvalent 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 Nuvalent will offset losses from the drop in Nuvalent's long position.Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
Nuvalent vs. Arcellx | Nuvalent vs. Vaxcyte | Nuvalent vs. Viridian Therapeutics | Nuvalent vs. Ventyx Biosciences |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Transaction History View history of all your transactions and understand their impact on performance | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |