Correlation Between American Public and Lincoln Educational
Can any of the company-specific risk be diversified away by investing in both American Public and Lincoln Educational 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 American Public and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and Lincoln Educational Services, you can compare the effects of market volatilities on American Public and Lincoln Educational 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 American Public with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Lincoln Educational.
Diversification Opportunities for American Public and Lincoln Educational
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Lincoln is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and American Public 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 American Public Education are associated (or correlated) with Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of American Public i.e., American Public and Lincoln Educational go up and down completely randomly.
Pair Corralation between American Public and Lincoln Educational
Given the investment horizon of 90 days American Public Education is expected to generate 1.14 times more return on investment than Lincoln Educational. However, American Public is 1.14 times more volatile than Lincoln Educational Services. It trades about 0.13 of its potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.06 per unit of risk. If you would invest 1,916 in American Public Education on October 20, 2024 and sell it today you would earn a total of 235.00 from holding American Public Education or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Lincoln Educational Services
Performance |
| Timeline |
| American Public Education |
| Lincoln Educational |
American Public and Lincoln Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Lincoln Educational
The main advantage of trading using opposite American Public and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Lincoln Educational 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 Educational will offset losses from the drop in Lincoln Educational's long position.| American Public vs. Laureate Education | American Public vs. Afya | American Public vs. Strategic Education | American Public vs. Stride Inc |
| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |