Correlation Between DAX Index and Lincoln Electric
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By analyzing existing cross correlation between DAX Index and Lincoln Electric Holdings, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Lincoln Electric.
Diversification Opportunities for DAX Index and Lincoln Electric
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and Lincoln is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Lincoln Electric go up and down completely randomly.
Pair Corralation between DAX Index and Lincoln Electric
Assuming the 90 days trading horizon DAX Index is expected to generate 6.02 times less return on investment than Lincoln Electric. But when comparing it to its historical volatility, DAX Index is 2.66 times less risky than Lincoln Electric. It trades about 0.1 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 18,200 in Lincoln Electric Holdings on September 2, 2024 and sell it today you would earn a total of 2,200 from holding Lincoln Electric Holdings or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Lincoln Electric Holdings
Performance |
| Timeline |
DAX Index and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Lincoln Electric Holdings
Pair trading matchups for Lincoln Electric
Pair Trading with DAX Index and Lincoln Electric
The main advantage of trading using opposite DAX Index and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. FEMALE HEALTH | DAX Index vs. CDN IMPERIAL BANK | DAX Index vs. Webster Financial | DAX Index vs. Cardinal Health |
| Lincoln Electric vs. AB SKF | Lincoln Electric vs. RBC Bearings Incorporated | Lincoln Electric vs. Makita |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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