Correlation Between Lincoln Electric and Pan Global
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Pan Global 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 Pan Global 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 Pan Global Resources, you can compare the effects of market volatilities on Lincoln Electric and Pan Global 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 Pan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Pan Global.
Diversification Opportunities for Lincoln Electric and Pan Global
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lincoln and Pan is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources 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 Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Pan Global go up and down completely randomly.
Pair Corralation between Lincoln Electric and Pan Global
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 0.44 times more return on investment than Pan Global. However, Lincoln Electric Holdings is 2.25 times less risky than Pan Global. It trades about 0.08 of its potential returns per unit of risk. Pan Global Resources is currently generating about -0.09 per unit of risk. If you would invest 19,878 in Lincoln Electric Holdings on December 2, 2024 and sell it today you would earn a total of 791.00 from holding Lincoln Electric Holdings or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Pan Global Resources
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Pan Global Resources |
Lincoln Electric and Pan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Pan Global
The main advantage of trading using opposite Lincoln Electric and Pan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Pan Global 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 Pan Global will offset losses from the drop in Pan Global's long position.| 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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