Correlation Between Lincoln National and Alphabet
Can any of the company-specific risk be diversified away by investing in both Lincoln National and Alphabet 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 Lincoln National and Alphabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Alphabet Inc Class C, you can compare the effects of market volatilities on Lincoln National and Alphabet 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 Lincoln National with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Alphabet.
Diversification Opportunities for Lincoln National and Alphabet
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and Alphabet is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C and Lincoln National 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 Lincoln National are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of Lincoln National i.e., Lincoln National and Alphabet go up and down completely randomly.
Pair Corralation between Lincoln National and Alphabet
Considering the 90-day investment horizon Lincoln National is expected to generate 1.33 times more return on investment than Alphabet. However, Lincoln National is 1.33 times more volatile than Alphabet Inc Class C. It trades about 0.1 of its potential returns per unit of risk. Alphabet Inc Class C is currently generating about 0.07 per unit of risk. If you would invest 2,078 in Lincoln National on January 20, 2024 and sell it today you would earn a total of 607.00 from holding Lincoln National or generate 29.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Lincoln National vs. Alphabet Inc Class C
Performance |
| Timeline |
| Lincoln National |
| Alphabet Class C |
Lincoln National and Alphabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln National and Alphabet
The main advantage of trading using opposite Lincoln National and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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