Correlation Between 50249AAF0 and Lincoln Electric

Can any of the company-specific risk be diversified away by investing in both 50249AAF0 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 50249AAF0 and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LYB 125 01 OCT 25 and Lincoln Electric Holdings, you can compare the effects of market volatilities on 50249AAF0 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 50249AAF0 with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of 50249AAF0 and Lincoln Electric.

Diversification Opportunities for 50249AAF0 and Lincoln Electric

0.37

Correlation Coefficient

50249AAF0  Lincoln Electric

Weak diversification

The 3 months correlation between 50249AAF0 and Lincoln is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding LYB 125 01 OCT 25 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 50249AAF0 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 LYB 125 01 OCT 25 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 50249AAF0 i.e., 50249AAF0 and Lincoln Electric go up and down completely randomly.

Pair Corralation between 50249AAF0 and Lincoln Electric

Assuming the 90 days trading horizon 50249AAF0 is expected to generate 29.44 times less return on investment than Lincoln Electric. But when comparing it to its historical volatility, LYB 125 01 OCT 25 is 4.45 times less risky than Lincoln Electric. It trades about 0.0 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16,485  in Lincoln Electric Holdings on October 23, 2024 and sell it today you would earn a total of  3,518  from holding Lincoln Electric Holdings or generate 21.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.67%
Values	Daily Returns

LYB 125 01 OCT 25  vs.  Lincoln Electric Holdings

LYB 125 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB 125 01 OCT 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for LYB 125 01 OCT 25 investors.

Lincoln Electric Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 50249AAF0 and Lincoln Electric

The main advantage of trading using opposite 50249AAF0 and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 50249AAF0 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 LYB 125 01 OCT 25 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.