Correlation Between Lincoln Electric and MIZUHO

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

Diversification Opportunities for Lincoln Electric and MIZUHO

0.0

Correlation Coefficient

Lincoln Electric  MIZUHO

Pay attention - limited upside

The 3 months correlation between Lincoln and MIZUHO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and MIZUHO FINANCIAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIZUHO FINANCIAL 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 MIZUHO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIZUHO FINANCIAL has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and MIZUHO go up and down completely randomly.

Pair Corralation between Lincoln Electric and MIZUHO

Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 1.05 times more return on investment than MIZUHO. However, Lincoln Electric is 1.05 times more volatile than MIZUHO FINANCIAL GROUP. It trades about 0.2 of its potential returns per unit of risk. MIZUHO FINANCIAL GROUP is currently generating about -0.04 per unit of risk. If you would invest  17,524  in Lincoln Electric Holdings on September 4, 2024 and sell it today you would earn a total of  4,230  from holding Lincoln Electric Holdings or generate 24.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Lincoln Electric Holdings  vs.  MIZUHO FINANCIAL GROUP

Lincoln Electric Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 15 (%) 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.

MIZUHO FINANCIAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIZUHO FINANCIAL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MIZUHO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lincoln Electric and MIZUHO

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

The idea behind Lincoln Electric Holdings and MIZUHO FINANCIAL GROUP 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.