Correlation Between Mativ Holdings and Lincoln Electric

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

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

Diversification Opportunities for Mativ Holdings and Lincoln Electric

0.85

Correlation Coefficient

Mativ Holdings  Lincoln Electric

Very poor diversification

The 3 months correlation between Mativ and Lincoln is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings i.e., Mativ Holdings and Lincoln Electric go up and down completely randomly.

Pair Corralation between Mativ Holdings and Lincoln Electric

Given the investment horizon of 90 days Mativ Holdings is expected to generate 1.23 times less return on investment than Lincoln Electric. In addition to that, Mativ Holdings is 2.02 times more volatile than Lincoln Electric Holdings. It trades about 0.1 of its total potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.25 per unit of volatility. If you would invest  18,212  in Lincoln Electric Holdings on May 5, 2025 and sell it today you would earn a total of  5,902  from holding Lincoln Electric Holdings or generate 32.41% return on investment over 90 days.

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

Mativ Holdings  vs.  Lincoln Electric Holdings

Mativ Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mativ Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Mativ Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Lincoln Electric Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Lincoln Electric displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mativ Holdings and Lincoln Electric

The main advantage of trading using opposite Mativ Holdings and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings 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 Mativ Holdings 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.