Correlation Between Lincoln Electric and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on Lincoln Electric and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Keurig Dr.
Diversification Opportunities for Lincoln Electric and Keurig Dr
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lincoln and Keurig is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Keurig Dr go up and down completely randomly.
Pair Corralation between Lincoln Electric and Keurig Dr
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 1.87 times more return on investment than Keurig Dr. However, Lincoln Electric is 1.87 times more volatile than Keurig Dr Pepper. It trades about 0.18 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.02 per unit of risk. If you would invest 19,708 in Lincoln Electric Holdings on August 30, 2024 and sell it today you would earn a total of 1,906 from holding Lincoln Electric Holdings or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Keurig Dr Pepper
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Keurig Dr Pepper |
Lincoln Electric and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Keurig Dr
The main advantage of trading using opposite Lincoln Electric and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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