Correlation Between Lincoln Electric and One Gas
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and One Gas 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 One Gas 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 One Gas, you can compare the effects of market volatilities on Lincoln Electric and One Gas 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 One Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and One Gas.
Diversification Opportunities for Lincoln Electric and One Gas
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and One is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and One Gas go up and down completely randomly.
Pair Corralation between Lincoln Electric and One Gas
Given the investment horizon of 90 days Lincoln Electric is expected to generate 1.1 times less return on investment than One Gas. In addition to that, Lincoln Electric is 1.35 times more volatile than One Gas. It trades about 0.2 of its total potential returns per unit of risk. One Gas is currently generating about 0.3 per unit of volatility. If you would invest 6,937 in One Gas on September 4, 2024 and sell it today you would earn a total of 741.00 from holding One Gas or generate 10.68% 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. One Gas
Performance |
| Timeline |
| Lincoln Electric Holdings |
| One Gas |
Lincoln Electric and One Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and One Gas
The main advantage of trading using opposite Lincoln Electric and One Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, One Gas 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 One Gas will offset losses from the drop in One Gas' long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
| One Gas vs. Northwest Natural Gas | One Gas vs. Chesapeake Utilities | One Gas vs. NewJersey Resources | One Gas vs. RGC Resources |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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