Correlation Between Bright Scholar and Lincoln Educational
Can any of the company-specific risk be diversified away by investing in both Bright Scholar 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 Bright Scholar and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Lincoln Educational Services, you can compare the effects of market volatilities on Bright Scholar 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 Bright Scholar with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Lincoln Educational.
Diversification Opportunities for Bright Scholar and Lincoln Educational
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bright and Lincoln is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar 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 Bright Scholar 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 Bright Scholar 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 Bright Scholar i.e., Bright Scholar and Lincoln Educational go up and down completely randomly.
Pair Corralation between Bright Scholar and Lincoln Educational
Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Lincoln Educational. But the stock apears to be less risky and, when comparing its historical volatility, Bright Scholar Education is 1.13 times less risky than Lincoln Educational. The stock trades about -0.09 of its potential returns per unit of risk. The Lincoln Educational Services is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,248 in Lincoln Educational Services on August 24, 2024 and sell it today you would earn a total of 312.00 from holding Lincoln Educational Services or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bright Scholar Education vs. Lincoln Educational Services
Performance |
| Timeline |
| Bright Scholar Education |
| Lincoln Educational |
Bright Scholar and Lincoln Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Lincoln Educational
The main advantage of trading using opposite Bright Scholar and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar 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.| Bright Scholar vs. Laureate Education | Bright Scholar vs. China Liberal Education | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Grand Canyon Education |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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