Correlation Between Lincoln Electric and Seaport Entertainment
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Seaport Entertainment 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 Seaport Entertainment 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 Seaport Entertainment Group, you can compare the effects of market volatilities on Lincoln Electric and Seaport Entertainment 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 Seaport Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Seaport Entertainment.
Diversification Opportunities for Lincoln Electric and Seaport Entertainment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lincoln and Seaport is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Seaport Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaport Entertainment 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 Seaport Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaport Entertainment has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Seaport Entertainment go up and down completely randomly.
Pair Corralation between Lincoln Electric and Seaport Entertainment
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to under-perform the Seaport Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Lincoln Electric Holdings is 2.55 times less risky than Seaport Entertainment. The stock trades about -0.05 of its potential returns per unit of risk. The Seaport Entertainment Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,788 in Seaport Entertainment Group on September 15, 2024 and sell it today you would earn a total of 27.00 from holding Seaport Entertainment Group or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Seaport Entertainment Group
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Seaport Entertainment |
Lincoln Electric and Seaport Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Seaport Entertainment
The main advantage of trading using opposite Lincoln Electric and Seaport Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Seaport Entertainment 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 Seaport Entertainment will offset losses from the drop in Seaport Entertainment's long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
| Seaport Entertainment vs. Lincoln Electric Holdings | Seaport Entertainment vs. European Wax Center | Seaport Entertainment vs. Beauty Health Co | Seaport Entertainment vs. Playstudios |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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