Correlation Between Lincoln Electric and Snap On
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and Snap On 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 Snap On 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 Snap on Incorporated, you can compare the effects of market volatilities on Lincoln Electric and Snap On 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 Snap On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and Snap On.
Diversification Opportunities for Lincoln Electric and Snap On
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lincoln and Snap is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Snap on Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap on 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 Snap On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap on has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Snap On go up and down completely randomly.
Pair Corralation between Lincoln Electric and Snap On
Assuming the 90 days horizon Lincoln Electric Holdings is expected to under-perform the Snap On. In addition to that, Lincoln Electric is 1.51 times more volatile than Snap on Incorporated. It trades about -0.03 of its total potential returns per unit of risk. Snap on Incorporated is currently generating about 0.0 per unit of volatility. If you would invest 33,763 in Snap on Incorporated on September 12, 2024 and sell it today you would lose (33.00) from holding Snap on Incorporated or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. Snap on Incorporated
Performance |
| Timeline |
| Lincoln Electric Holdings |
| Snap on |
Lincoln Electric and Snap On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and Snap On
The main advantage of trading using opposite Lincoln Electric and Snap On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, Snap On 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 Snap On will offset losses from the drop in Snap On's long position.| Lincoln Electric vs. Rayonier Advanced Materials | Lincoln Electric vs. Pembina Pipeline Corp | Lincoln Electric vs. VULCAN MATERIALS | Lincoln Electric vs. Southwest Airlines Co |
| Snap On vs. INDO RAMA SYNTHETIC | Snap On vs. SEKISUI CHEMICAL | Snap On vs. NISSAN CHEMICAL IND | Snap On vs. ACCSYS TECHPLC EO |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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