Correlation Between NYSE Composite and Lincoln National
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lincoln National 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 NYSE Composite and Lincoln National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lincoln National, you can compare the effects of market volatilities on NYSE Composite and Lincoln National 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 NYSE Composite with a short position of Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lincoln National.
Diversification Opportunities for NYSE Composite and Lincoln National
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Lincoln is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and NYSE Composite 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 NYSE Composite are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lincoln National go up and down completely randomly.
Pair Corralation between NYSE Composite and Lincoln National
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.2 times less return on investment than Lincoln National. But when comparing it to its historical volatility, NYSE Composite is 3.38 times less risky than Lincoln National. It trades about 0.11 of its potential returns per unit of risk. Lincoln National is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,131 in Lincoln National on August 31, 2024 and sell it today you would earn a total of 1,423 from holding Lincoln National or generate 66.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Lincoln National
Performance |
| Timeline |
NYSE Composite and Lincoln National Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lincoln National
Pair trading matchups for Lincoln National
Pair Trading with NYSE Composite and Lincoln National
The main advantage of trading using opposite NYSE Composite and Lincoln National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lincoln National 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 Lincoln National will offset losses from the drop in Lincoln National's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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