Correlation Between Valneva SE and Lincoln National

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

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

Diversification Opportunities for Valneva SE and Lincoln National

0.42

Correlation Coefficient

Valneva SE  Lincoln National

Very weak diversification

The 3 months correlation between Valneva and Lincoln is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and Valneva SE 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 Valneva SE ADR are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Valneva SE i.e., Valneva SE and Lincoln National go up and down completely randomly.

Pair Corralation between Valneva SE and Lincoln National

Given the investment horizon of 90 days Valneva SE ADR is expected to generate 7.52 times more return on investment than Lincoln National. However, Valneva SE is 7.52 times more volatile than Lincoln National. It trades about 0.1 of its potential returns per unit of risk. Lincoln National is currently generating about -0.05 per unit of risk. If you would invest  431.00  in Valneva SE ADR on October 10, 2024 and sell it today you would earn a total of  35.00  from holding Valneva SE ADR or generate 8.12% return on investment over 90 days.

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

Valneva SE ADR  vs.  Lincoln National

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lincoln National

Risk-Adjusted Performance

0 of 100

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Valneva SE and Lincoln National

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

The idea behind Valneva SE ADR and Lincoln National 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.