Correlation Between SEI Investments and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both SEI Investments 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 SEI Investments and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Investments and Lincoln Electric Holdings, you can compare the effects of market volatilities on SEI Investments 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 SEI Investments with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Lincoln Electric.
Diversification Opportunities for SEI Investments and Lincoln Electric
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SEI and Lincoln is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments 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 SEI Investments 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 SEI Investments 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 SEI Investments i.e., SEI Investments and Lincoln Electric go up and down completely randomly.
Pair Corralation between SEI Investments and Lincoln Electric
Given the investment horizon of 90 days SEI Investments is expected to generate 1.26 times less return on investment than Lincoln Electric. But when comparing it to its historical volatility, SEI Investments is 1.91 times less risky than Lincoln Electric. It trades about 0.28 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 19,726 in Lincoln Electric Holdings on August 31, 2024 and sell it today you would earn a total of 1,936 from holding Lincoln Electric Holdings or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI Investments vs. Lincoln Electric Holdings
Performance |
| Timeline |
| SEI Investments |
| Lincoln Electric Holdings |
SEI Investments and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Lincoln Electric
The main advantage of trading using opposite SEI Investments and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments 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.| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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