Correlation Between Lincoln Electric and NCR Corp
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and NCR Corp 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 NCR Corp 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 NCR Corp Pref, you can compare the effects of market volatilities on Lincoln Electric and NCR Corp 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 NCR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and NCR Corp.
Diversification Opportunities for Lincoln Electric and NCR Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lincoln and NCR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and NCR Corp Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR Corp Pref 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 NCR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR Corp Pref has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and NCR Corp go up and down completely randomly.
Pair Corralation between Lincoln Electric and NCR Corp
Given the investment horizon of 90 days Lincoln Electric is expected to generate 3.79 times less return on investment than NCR Corp. But when comparing it to its historical volatility, Lincoln Electric Holdings is 1.69 times less risky than NCR Corp. It trades about 0.03 of its potential returns per unit of risk. NCR Corp Pref is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 84,200 in NCR Corp Pref on September 1, 2024 and sell it today you would earn a total of 32,925 from holding NCR Corp Pref or generate 39.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 49.19% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. NCR Corp Pref
Performance |
| Timeline |
| Lincoln Electric Holdings |
| NCR Corp Pref |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lincoln Electric and NCR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and NCR Corp
The main advantage of trading using opposite Lincoln Electric and NCR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, NCR Corp 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 NCR Corp will offset losses from the drop in NCR Corp's long position.| Lincoln Electric vs. Timken Company | Lincoln Electric vs. Hillman Solutions Corp | Lincoln Electric vs. AB SKF | Lincoln Electric vs. Kennametal |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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