Correlation Between 235825AH9 and Lincoln Electric

Can any of the company-specific risk be diversified away by investing in both 235825AH9 and Lincoln Electric 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 235825AH9 and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US235825AH97 and Lincoln Electric Holdings, you can compare the effects of market volatilities on 235825AH9 and Lincoln Electric 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 235825AH9 with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of 235825AH9 and Lincoln Electric.

Diversification Opportunities for 235825AH9 and Lincoln Electric

0.65

Correlation Coefficient

235825AH9  Lincoln Electric

Poor diversification

The 3 months correlation between 235825AH9 and Lincoln is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding US235825AH97 and Lincoln Electric Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Electric Holdings and 235825AH9 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 US235825AH97 are associated (or correlated) with Lincoln Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Electric Holdings has no effect on the direction of 235825AH9 i.e., 235825AH9 and Lincoln Electric go up and down completely randomly.

Pair Corralation between 235825AH9 and Lincoln Electric

Assuming the 90 days trading horizon US235825AH97 is expected to generate 1.29 times more return on investment than Lincoln Electric. However, 235825AH9 is 1.29 times more volatile than Lincoln Electric Holdings. It trades about -0.23 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about -0.53 per unit of risk. If you would invest  9,338  in US235825AH97 on October 9, 2024 and sell it today you would lose (537.00) from holding US235825AH97 or give up 5.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

US235825AH97  vs.  Lincoln Electric Holdings

US235825AH97

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US235825AH97 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 235825AH9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lincoln Electric Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lincoln Electric Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Lincoln Electric is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 235825AH9 and Lincoln Electric

The main advantage of trading using opposite 235825AH9 and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 235825AH9 position performs unexpectedly, Lincoln Electric 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 Lincoln Electric will offset losses from the drop in Lincoln Electric's long position.

The idea behind US235825AH97 and Lincoln Electric Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.