Correlation Between Teleflex Incorporated and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Teleflex Incorporated 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 Teleflex Incorporated and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teleflex Incorporated and Lincoln Electric Holdings, you can compare the effects of market volatilities on Teleflex Incorporated 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 Teleflex Incorporated with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teleflex Incorporated and Lincoln Electric.
Diversification Opportunities for Teleflex Incorporated and Lincoln Electric
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Teleflex and Lincoln is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and Lincoln Electric go up and down completely randomly.
Pair Corralation between Teleflex Incorporated and Lincoln Electric
Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Lincoln Electric. In addition to that, Teleflex Incorporated is 1.06 times more volatile than Lincoln Electric Holdings. It trades about -0.03 of its total potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.02 per unit of volatility. If you would invest 20,402 in Lincoln Electric Holdings on September 3, 2024 and sell it today you would earn a total of 1,352 from holding Lincoln Electric Holdings or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teleflex Incorporated vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Teleflex Incorporated |
| Lincoln Electric Holdings |
Teleflex Incorporated and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teleflex Incorporated and Lincoln Electric
The main advantage of trading using opposite Teleflex Incorporated and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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 Teleflex Incorporated 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. Timken Company |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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