Correlation Between Lincoln Electric and Summa Silver
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Summa Silver 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 Summa Silver 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 Summa Silver Corp, you can compare the effects of market volatilities on Lincoln Electric and Summa Silver 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 Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Summa Silver.
Diversification Opportunities for Lincoln Electric and Summa Silver
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lincoln and Summa is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Summa Silver go up and down completely randomly.
Pair Corralation between Lincoln Electric and Summa Silver
Given the investment horizon of 90 days Lincoln Electric is expected to generate 1.9 times less return on investment than Summa Silver. But when comparing it to its historical volatility, Lincoln Electric Holdings is 2.39 times less risky than Summa Silver. It trades about 0.11 of its potential returns per unit of risk. Summa Silver Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Summa Silver Corp on December 11, 2024 and sell it today you would earn a total of 3.00 from holding Summa Silver Corp or generate 14.29% 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. Summa Silver Corp
Performance |
Timeline |
Lincoln Electric Holdings |
Summa Silver Corp |
Lincoln Electric and Summa Silver Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lincoln Electric and Summa Silver
The main advantage of trading using opposite Lincoln Electric and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Summa Silver 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 Summa Silver will offset losses from the drop in Summa Silver's long position.Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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