Correlation Between CaliberCos and Lincoln Electric

Can any of the company-specific risk be diversified away by investing in both CaliberCos 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 CaliberCos and Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CaliberCos Class A and Lincoln Electric Holdings, you can compare the effects of market volatilities on CaliberCos 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 CaliberCos with a short position of Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of CaliberCos and Lincoln Electric.

Diversification Opportunities for CaliberCos and Lincoln Electric

-0.61

Correlation Coefficient

CaliberCos  Lincoln Electric

Excellent diversification

The 3 months correlation between CaliberCos and Lincoln is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CaliberCos Class A 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 CaliberCos 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 CaliberCos Class A 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 CaliberCos i.e., CaliberCos and Lincoln Electric go up and down completely randomly.

Pair Corralation between CaliberCos and Lincoln Electric

Considering the 90-day investment horizon CaliberCos Class A is expected to under-perform the Lincoln Electric. In addition to that, CaliberCos is 3.52 times more volatile than Lincoln Electric Holdings. It trades about -0.02 of its total potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.12 per unit of volatility. If you would invest  18,364  in Lincoln Electric Holdings on September 14, 2024 and sell it today you would earn a total of  2,399  from holding Lincoln Electric Holdings or generate 13.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CaliberCos Class A  vs.  Lincoln Electric Holdings

CaliberCos Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CaliberCos Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lincoln Electric Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Lincoln Electric displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CaliberCos and Lincoln Electric

The main advantage of trading using opposite CaliberCos and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CaliberCos 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 CaliberCos Class A 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.