Correlation Between Lincoln Electric and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated, you can compare the effects of market volatilities on Lincoln Electric and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Teleflex Incorporated.
Diversification Opportunities for Lincoln Electric and Teleflex Incorporated
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lincoln and Teleflex is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Lincoln Electric and Teleflex Incorporated
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 0.91 times more return on investment than Teleflex Incorporated. However, Lincoln Electric Holdings is 1.1 times less risky than Teleflex Incorporated. It trades about 0.06 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.02 per unit of risk. If you would invest 14,349 in Lincoln Electric Holdings on September 2, 2024 and sell it today you would earn a total of 7,499 from holding Lincoln Electric Holdings or generate 52.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Teleflex Incorporated
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Teleflex Incorporated |
Lincoln Electric and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Teleflex Incorporated
The main advantage of trading using opposite Lincoln Electric and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated's long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
| Teleflex Incorporated vs. Profound Medical Corp | Teleflex Incorporated vs. Si Bone | Teleflex Incorporated vs. Nevro Corp | Teleflex Incorporated vs. Orthopediatrics Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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