Correlation Between Trump Media and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Trump Media 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 Trump Media and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trump Media Technology and Lincoln Electric Holdings, you can compare the effects of market volatilities on Trump Media 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 Trump Media with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trump Media and Lincoln Electric.
Diversification Opportunities for Trump Media and Lincoln Electric
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trump and Lincoln is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology 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 Trump Media 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 Trump Media Technology 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 Trump Media i.e., Trump Media and Lincoln Electric go up and down completely randomly.
Pair Corralation between Trump Media and Lincoln Electric
Considering the 90-day investment horizon Trump Media Technology is expected to generate 4.78 times more return on investment than Lincoln Electric. However, Trump Media is 4.78 times more volatile than Lincoln Electric Holdings. It trades about 0.04 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.05 per unit of risk. If you would invest 2,226 in Trump Media Technology on August 24, 2024 and sell it today you would earn a total of 823.00 from holding Trump Media Technology or generate 36.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trump Media Technology vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Trump Media Technology |
| Lincoln Electric Holdings |
Trump Media and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trump Media and Lincoln Electric
The main advantage of trading using opposite Trump Media and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trump Media 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.| Trump Media vs. Zillow Group Class | Trump Media vs. Kanzhun Ltd ADR | Trump Media vs. Outbrain | Trump Media vs. TuanChe ADR |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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