Correlation Between Playtika Holding and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Playtika Holding and Lincoln Electric 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 Playtika Holding and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtika Holding Corp and Lincoln Electric Holdings, you can compare the effects of market volatilities on Playtika Holding and Lincoln Electric 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 Playtika Holding with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtika Holding and Lincoln Electric.
Diversification Opportunities for Playtika Holding and Lincoln Electric
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Playtika and Lincoln is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Lincoln Electric Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Electric Holdings and Playtika Holding 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 Playtika Holding Corp are associated (or correlated) with Lincoln Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Electric Holdings has no effect on the direction of Playtika Holding i.e., Playtika Holding and Lincoln Electric go up and down completely randomly.
Pair Corralation between Playtika Holding and Lincoln Electric
Given the investment horizon of 90 days Playtika Holding is expected to generate 1.37 times less return on investment than Lincoln Electric. But when comparing it to its historical volatility, Playtika Holding Corp is 2.34 times less risky than Lincoln Electric. It trades about 0.33 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 19,584 in Lincoln Electric Holdings on August 29, 2024 and sell it today you would earn a total of 2,030 from holding Lincoln Electric Holdings or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtika Holding Corp vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Playtika Holding Corp |
| Lincoln Electric Holdings |
Playtika Holding and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtika Holding and Lincoln Electric
The main advantage of trading using opposite Playtika Holding and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding position performs unexpectedly, Lincoln Electric 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 Electric will offset losses from the drop in Lincoln Electric's long position.| Playtika Holding vs. AEye Inc | Playtika Holding vs. Arqit Quantum Warrants | Playtika Holding vs. Xos Equity Warrants |
| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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