Correlation Between Lincoln Electric and Corpay
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Corpay 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 Corpay 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 Corpay Inc, you can compare the effects of market volatilities on Lincoln Electric and Corpay 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 Corpay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Corpay.
Diversification Opportunities for Lincoln Electric and Corpay
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lincoln and Corpay is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Corpay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corpay Inc 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 Corpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corpay Inc has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Corpay go up and down completely randomly.
Pair Corralation between Lincoln Electric and Corpay
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to under-perform the Corpay. In addition to that, Lincoln Electric is 1.58 times more volatile than Corpay Inc. It trades about -0.13 of its total potential returns per unit of risk. Corpay Inc is currently generating about -0.2 per unit of volatility. If you would invest 37,315 in Corpay Inc on September 12, 2024 and sell it today you would lose (1,591) from holding Corpay Inc or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Corpay Inc
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Corpay Inc |
Lincoln Electric and Corpay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Corpay
The main advantage of trading using opposite Lincoln Electric and Corpay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Corpay 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 Corpay will offset losses from the drop in Corpay's long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Snap On | Lincoln Electric vs. Eastern Co | Lincoln Electric vs. Hillman Solutions Corp |
| Corpay vs. Aquestive Therapeutics | Corpay vs. Hawkins | Corpay vs. Avient Corp | Corpay vs. Merit Medical Systems |
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 CEOs Directory module to screen CEOs from public companies around the world.
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