Correlation Between Lincoln National and PDF Solutions

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

By analyzing existing cross correlation between Lincoln National and PDF Solutions, you can compare the effects of market volatilities on Lincoln National and PDF Solutions 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 PDF Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and PDF Solutions.

Diversification Opportunities for Lincoln National and PDF Solutions

-0.16

Correlation Coefficient

Lincoln National  PDF Solutions

Good diversification

The 3 months correlation between Lincoln and PDF is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and PDF Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDF Solutions 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 PDF Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDF Solutions has no effect on the direction of Lincoln National i.e., Lincoln National and PDF Solutions go up and down completely randomly.

Pair Corralation between Lincoln National and PDF Solutions

Considering the 90-day investment horizon Lincoln National is expected to generate 0.94 times more return on investment than PDF Solutions. However, Lincoln National is 1.06 times less risky than PDF Solutions. It trades about 0.07 of its potential returns per unit of risk. PDF Solutions is currently generating about 0.02 per unit of risk. If you would invest  2,695  in Lincoln National on February 12, 2024 and sell it today you would earn a total of  236.00  from holding Lincoln National or generate 8.76% return on investment over 90 days.

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

Lincoln National  vs.  PDF Solutions

Lincoln National

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Lincoln National may actually be approaching a critical reversion point that can send shares even higher in June 2024.

PDF Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PDF Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PDF Solutions is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lincoln National and PDF Solutions

The main advantage of trading using opposite Lincoln National and PDF Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National position performs unexpectedly, PDF Solutions 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 PDF Solutions will offset losses from the drop in PDF Solutions' long position.

The idea behind Lincoln National and PDF Solutions 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.