Correlation Between KAUFMAN ET and LINCOLN EDUCATSERVICES
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and LINCOLN EDUCATSERVICES 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 KAUFMAN ET and LINCOLN EDUCATSERVICES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and LINCOLN EDUCATSERVICES, you can compare the effects of market volatilities on KAUFMAN ET and LINCOLN EDUCATSERVICES 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 KAUFMAN ET with a short position of LINCOLN EDUCATSERVICES. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and LINCOLN EDUCATSERVICES.
Diversification Opportunities for KAUFMAN ET and LINCOLN EDUCATSERVICES
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAUFMAN and LINCOLN is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and LINCOLN EDUCATSERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINCOLN EDUCATSERVICES and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with LINCOLN EDUCATSERVICES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINCOLN EDUCATSERVICES has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and LINCOLN EDUCATSERVICES go up and down completely randomly.
Pair Corralation between KAUFMAN ET and LINCOLN EDUCATSERVICES
Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 2.82 times less return on investment than LINCOLN EDUCATSERVICES. But when comparing it to its historical volatility, KAUFMAN ET BROAD is 1.47 times less risky than LINCOLN EDUCATSERVICES. It trades about 0.05 of its potential returns per unit of risk. LINCOLN EDUCATSERVICES is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 530.00 in LINCOLN EDUCATSERVICES on September 12, 2024 and sell it today you would earn a total of 990.00 from holding LINCOLN EDUCATSERVICES or generate 186.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. LINCOLN EDUCATSERVICES
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| LINCOLN EDUCATSERVICES |
KAUFMAN ET and LINCOLN EDUCATSERVICES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and LINCOLN EDUCATSERVICES
The main advantage of trading using opposite KAUFMAN ET and LINCOLN EDUCATSERVICES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, LINCOLN EDUCATSERVICES 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 EDUCATSERVICES will offset losses from the drop in LINCOLN EDUCATSERVICES's long position.The idea behind KAUFMAN ET BROAD and LINCOLN EDUCATSERVICES 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.| LINCOLN EDUCATSERVICES vs. Bausch Health Companies | LINCOLN EDUCATSERVICES vs. KAUFMAN ET BROAD | LINCOLN EDUCATSERVICES vs. Cardinal Health | LINCOLN EDUCATSERVICES vs. BROADSTNET LEADL 00025 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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