Correlation Between Lincoln Electric and Acco Brands
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Acco Brands 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 Lincoln Electric and Acco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln Electric Holdings and Acco Brands, you can compare the effects of market volatilities on Lincoln Electric and Acco Brands 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 Lincoln Electric with a short position of Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Acco Brands.
Diversification Opportunities for Lincoln Electric and Acco Brands
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and Acco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Lincoln Electric 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 Lincoln Electric Holdings are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Acco Brands go up and down completely randomly.
Pair Corralation between Lincoln Electric and Acco Brands
Given the investment horizon of 90 days Lincoln Electric is expected to generate 1.77 times less return on investment than Acco Brands. But when comparing it to its historical volatility, Lincoln Electric Holdings is 1.17 times less risky than Acco Brands. It trades about 0.18 of its potential returns per unit of risk. Acco Brands is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 491.00 in Acco Brands on August 31, 2024 and sell it today you would earn a total of 90.00 from holding Acco Brands or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Acco Brands
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Acco Brands |
Lincoln Electric and Acco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Acco Brands
The main advantage of trading using opposite Lincoln Electric and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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