Correlation Between Lincoln Electric and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Vera Bradley 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 Vera Bradley 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 Vera Bradley, you can compare the effects of market volatilities on Lincoln Electric and Vera Bradley 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 Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Vera Bradley.
Diversification Opportunities for Lincoln Electric and Vera Bradley
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lincoln and Vera is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley 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 Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Vera Bradley go up and down completely randomly.
Pair Corralation between Lincoln Electric and Vera Bradley
Given the investment horizon of 90 days Lincoln Electric Holdings is expected to generate 0.78 times more return on investment than Vera Bradley. However, Lincoln Electric Holdings is 1.28 times less risky than Vera Bradley. It trades about 0.14 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.05 per unit of risk. If you would invest 18,608 in Lincoln Electric Holdings on September 2, 2024 and sell it today you would earn a total of 3,240 from holding Lincoln Electric Holdings or generate 17.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Vera Bradley
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Vera Bradley |
Lincoln Electric and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Vera Bradley
The main advantage of trading using opposite Lincoln Electric and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Vera Bradley 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 Vera Bradley will offset losses from the drop in Vera Bradley's long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
| Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |