Correlation Between Lincoln Electric and Valneva SE

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

Diversification Opportunities for Lincoln Electric and Valneva SE

-0.86

Correlation Coefficient

Lincoln Electric  Valneva SE

Pay attention - limited upside

The 3 months correlation between Lincoln and Valneva is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Valneva SE go up and down completely randomly.

Pair Corralation between Lincoln Electric and Valneva SE

Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 0.42 times more return on investment than Valneva SE. However, Lincoln Electric Holdings is 2.38 times less risky than Valneva SE. It trades about -0.13 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.24 per unit of risk. If you would invest  21,828  in Lincoln Electric Holdings on September 12, 2024 and sell it today you would lose (928.00) from holding Lincoln Electric Holdings or give up 4.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lincoln Electric Holdings  vs.  Valneva SE ADR

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.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lincoln Electric and Valneva SE

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

The idea behind Lincoln Electric Holdings and Valneva SE ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.