Correlation Between QEP and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both QEP 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 QEP and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QEP Co Inc and Lincoln Electric Holdings, you can compare the effects of market volatilities on QEP 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 QEP with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of QEP and Lincoln Electric.
Diversification Opportunities for QEP and Lincoln Electric
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between QEP and Lincoln is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding QEP Co Inc 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 QEP 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 QEP Co Inc 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 QEP i.e., QEP and Lincoln Electric go up and down completely randomly.
Pair Corralation between QEP and Lincoln Electric
If you would invest 19,376 in Lincoln Electric Holdings on August 24, 2024 and sell it today you would earn a total of 1,475 from holding Lincoln Electric Holdings or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
QEP Co Inc vs. Lincoln Electric Holdings
Performance |
| Timeline |
| QEP Co Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lincoln Electric Holdings |
QEP and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QEP and Lincoln Electric
The main advantage of trading using opposite QEP and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QEP 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.The idea behind QEP Co Inc and Lincoln Electric Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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