Correlation Between Virgin Group and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Virgin Group 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 Virgin Group and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Group Acquisition and Lincoln Electric Holdings, you can compare the effects of market volatilities on Virgin Group 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 Virgin Group with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Group and Lincoln Electric.
Diversification Opportunities for Virgin Group and Lincoln Electric
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Virgin and Lincoln is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Group Acquisition 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 Virgin Group 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 Virgin Group Acquisition 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 Virgin Group i.e., Virgin Group and Lincoln Electric go up and down completely randomly.
Pair Corralation between Virgin Group and Lincoln Electric
Given the investment horizon of 90 days Virgin Group Acquisition is expected to generate 3.24 times more return on investment than Lincoln Electric. However, Virgin Group is 3.24 times more volatile than Lincoln Electric Holdings. It trades about 0.01 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about -0.12 per unit of risk. If you would invest 148.00 in Virgin Group Acquisition on September 12, 2024 and sell it today you would lose (2.00) from holding Virgin Group Acquisition or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Group Acquisition vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Virgin Group Acquisition |
| Lincoln Electric Holdings |
Virgin Group and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Group and Lincoln Electric
The main advantage of trading using opposite Virgin Group and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Group 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.| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Snap On | Lincoln Electric vs. Eastern Co | Lincoln Electric vs. Hillman Solutions Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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