Correlation Between CDW Corp and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both CDW Corp 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 CDW Corp and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Lincoln Electric Holdings, you can compare the effects of market volatilities on CDW Corp 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 CDW Corp with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Lincoln Electric.
Diversification Opportunities for CDW Corp and Lincoln Electric
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CDW and Lincoln is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp 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 CDW Corp 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 CDW Corp 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 CDW Corp i.e., CDW Corp and Lincoln Electric go up and down completely randomly.
Pair Corralation between CDW Corp and Lincoln Electric
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Lincoln Electric. But the stock apears to be less risky and, when comparing its historical volatility, CDW Corp is 1.16 times less risky than Lincoln Electric. The stock trades about -0.15 of its potential returns per unit of risk. The Lincoln Electric Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 20,175 in Lincoln Electric Holdings on September 2, 2024 and sell it today you would earn a total of 1,673 from holding Lincoln Electric Holdings or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Lincoln Electric Holdings
Performance |
| Timeline |
| CDW Corp |
| Lincoln Electric Holdings |
CDW Corp and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Lincoln Electric
The main advantage of trading using opposite CDW Corp and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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.| CDW Corp vs. Knowles Cor | CDW Corp vs. Ubiquiti Networks | CDW Corp vs. AmpliTech Group | CDW Corp vs. Viavi Solutions |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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