Correlation Between Dana and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Dana 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 Dana and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Inc and Lincoln Electric Holdings, you can compare the effects of market volatilities on Dana 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 Dana with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Lincoln Electric.
Diversification Opportunities for Dana and Lincoln Electric
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dana and Lincoln is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc 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 Dana 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 Dana Inc 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 Dana i.e., Dana and Lincoln Electric go up and down completely randomly.
Pair Corralation between Dana and Lincoln Electric
Considering the 90-day investment horizon Dana Inc is expected to under-perform the Lincoln Electric. In addition to that, Dana is 1.85 times more volatile than Lincoln Electric Holdings. It trades about -0.07 of its total potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.11 per unit of volatility. If you would invest 19,369 in Lincoln Electric Holdings on August 28, 2024 and sell it today you would earn a total of 2,625 from holding Lincoln Electric Holdings or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Inc vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Dana Inc |
| Lincoln Electric Holdings |
Dana and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana and Lincoln Electric
The main advantage of trading using opposite Dana and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana 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 Dana Inc 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.| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |