Correlation Between Alvarium Tiedemann and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Alvarium Tiedemann 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 Alvarium Tiedemann and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvarium Tiedemann Holdings and Lincoln Electric Holdings, you can compare the effects of market volatilities on Alvarium Tiedemann 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 Alvarium Tiedemann with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvarium Tiedemann and Lincoln Electric.
Diversification Opportunities for Alvarium Tiedemann and Lincoln Electric
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alvarium and Lincoln is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alvarium Tiedemann Holdings 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 Alvarium Tiedemann 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 Alvarium Tiedemann Holdings 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 Alvarium Tiedemann i.e., Alvarium Tiedemann and Lincoln Electric go up and down completely randomly.
Pair Corralation between Alvarium Tiedemann and Lincoln Electric
Given the investment horizon of 90 days Alvarium Tiedemann Holdings is expected to generate 1.48 times more return on investment than Lincoln Electric. However, Alvarium Tiedemann is 1.48 times more volatile than Lincoln Electric Holdings. It trades about 0.15 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.18 per unit of risk. If you would invest 405.00 in Alvarium Tiedemann Holdings on August 27, 2024 and sell it today you would earn a total of 43.00 from holding Alvarium Tiedemann Holdings or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvarium Tiedemann Holdings vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Alvarium Tiedemann |
| Lincoln Electric Holdings |
Alvarium Tiedemann and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvarium Tiedemann and Lincoln Electric
The main advantage of trading using opposite Alvarium Tiedemann and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvarium Tiedemann 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.| Alvarium Tiedemann vs. Kandi Technologies Group | Alvarium Tiedemann vs. Lipocine | Alvarium Tiedemann vs. Weibo Corp | Alvarium Tiedemann vs. Radcom |
| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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