Correlation Between Lincoln National and TPT Strategic

Can any of the company-specific risk be diversified away by investing in both Lincoln National and TPT Strategic 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 National and TPT Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lincoln National and TPT Strategic, you can compare the effects of market volatilities on Lincoln National and TPT Strategic 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 National with a short position of TPT Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and TPT Strategic.

Diversification Opportunities for Lincoln National and TPT Strategic

-0.12

Correlation Coefficient

Lincoln National  TPT Strategic

Good diversification

The 3 months correlation between Lincoln and TPT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and TPT Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPT Strategic and Lincoln National 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 National are associated (or correlated) with TPT Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPT Strategic has no effect on the direction of Lincoln National i.e., Lincoln National and TPT Strategic go up and down completely randomly.

Pair Corralation between Lincoln National and TPT Strategic

Assuming the 90 days trading horizon Lincoln National is expected to generate 295.43 times less return on investment than TPT Strategic. But when comparing it to its historical volatility, Lincoln National is 20.23 times less risky than TPT Strategic. It trades about 0.01 of its potential returns per unit of risk. TPT Strategic is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  495.00  in TPT Strategic on December 20, 2024 and sell it today you would earn a total of  405.00  from holding TPT Strategic or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Lincoln National  vs.  TPT Strategic

Lincoln National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lincoln National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lincoln National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TPT Strategic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TPT Strategic are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, TPT Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lincoln National and TPT Strategic

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

The idea behind Lincoln National and TPT Strategic 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.