Correlation Between Lincoln National and Emerge Capital

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Can any of the company-specific risk be diversified away by investing in both Lincoln National and Emerge Capital 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 Emerge Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Emerge Capital Management, you can compare the effects of market volatilities on Lincoln National and Emerge Capital 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 Emerge Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Emerge Capital.

Diversification Opportunities for Lincoln National and Emerge Capital

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Lincoln and Emerge is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Emerge Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerge Capital Management 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 Emerge Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerge Capital Management has no effect on the direction of Lincoln National i.e., Lincoln National and Emerge Capital go up and down completely randomly.

Pair Corralation between Lincoln National and Emerge Capital

If you would invest  2,724  in Lincoln National on December 30, 2023 and sell it today you would earn a total of  469.00  from holding Lincoln National or generate 17.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Lincoln National  vs.  Emerge Capital Management

 Performance 
       Timeline  
Lincoln National 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lincoln National exhibited solid returns over the last few months and may actually be approaching a breakup point.
Emerge Capital Management 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Emerge Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Emerge Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lincoln National and Emerge Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lincoln National and Emerge Capital

The main advantage of trading using opposite Lincoln National and Emerge Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National position performs unexpectedly, Emerge Capital 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 Emerge Capital will offset losses from the drop in Emerge Capital's long position.
The idea behind Lincoln National and Emerge Capital Management 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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