Correlation Between Willscot Mobile and Lincoln Electric

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

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

Diversification Opportunities for Willscot Mobile and Lincoln Electric

0.36

Correlation Coefficient

Willscot Mobile  Lincoln Electric

Weak diversification

The 3 months correlation between Willscot and Lincoln is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Willscot Mobile Mini 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 Willscot Mobile 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 Willscot Mobile Mini 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 Willscot Mobile i.e., Willscot Mobile and Lincoln Electric go up and down completely randomly.

Pair Corralation between Willscot Mobile and Lincoln Electric

Considering the 90-day investment horizon Willscot Mobile Mini is expected to generate 2.24 times more return on investment than Lincoln Electric. However, Willscot Mobile is 2.24 times more volatile than Lincoln Electric Holdings. It trades about -0.24 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about -0.61 per unit of risk. If you would invest  3,824  in Willscot Mobile Mini on September 30, 2024 and sell it today you would lose (455.00) from holding Willscot Mobile Mini or give up 11.9% of portfolio value over 90 days.

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

Willscot Mobile Mini  vs.  Lincoln Electric Holdings

Willscot Mobile Mini

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willscot Mobile Mini has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Willscot Mobile and Lincoln Electric

The main advantage of trading using opposite Willscot Mobile and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willscot Mobile 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 Willscot Mobile Mini 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.