Correlation Between Lincoln Electric and Univest Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Univest Pennsylvania 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 Univest Pennsylvania 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 Univest Pennsylvania, you can compare the effects of market volatilities on Lincoln Electric and Univest Pennsylvania 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 Univest Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Univest Pennsylvania.
Diversification Opportunities for Lincoln Electric and Univest Pennsylvania
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lincoln and Univest is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania 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 Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Univest Pennsylvania go up and down completely randomly.
Pair Corralation between Lincoln Electric and Univest Pennsylvania
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to under-perform the Univest Pennsylvania. In addition to that, Lincoln Electric is 1.4 times more volatile than Univest Pennsylvania. It trades about -0.13 of its total potential returns per unit of risk. Univest Pennsylvania is currently generating about 0.03 per unit of volatility. If you would invest 3,176 in Univest Pennsylvania on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Univest Pennsylvania or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Univest Pennsylvania
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Univest Pennsylvania |
Lincoln Electric and Univest Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Univest Pennsylvania
The main advantage of trading using opposite Lincoln Electric and Univest Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Univest Pennsylvania 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 Univest Pennsylvania will offset losses from the drop in Univest Pennsylvania's long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Snap On | Lincoln Electric vs. Eastern Co | Lincoln Electric vs. Hillman Solutions Corp |
| Univest Pennsylvania vs. JPMorgan Chase Co | Univest Pennsylvania vs. Citigroup | Univest Pennsylvania vs. Wells Fargo | Univest Pennsylvania vs. Toronto Dominion Bank |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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