Correlation Between Biglari Holdings and Lincoln Educational
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings 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 Biglari Holdings and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Lincoln Educational Services, you can compare the effects of market volatilities on Biglari Holdings 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 Biglari Holdings with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Lincoln Educational.
Diversification Opportunities for Biglari Holdings and Lincoln Educational
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Lincoln is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and Biglari 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 Biglari Holdings 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 Biglari Holdings i.e., Biglari Holdings and Lincoln Educational go up and down completely randomly.
Pair Corralation between Biglari Holdings and Lincoln Educational
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.35 times less return on investment than Lincoln Educational. But when comparing it to its historical volatility, Biglari Holdings is 1.15 times less risky than Lincoln Educational. It trades about 0.31 of its potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,281 in Lincoln Educational Services on August 28, 2024 and sell it today you would earn a total of 354.00 from holding Lincoln Educational Services or generate 27.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Lincoln Educational Services
Performance |
| Timeline |
| Biglari Holdings |
| Lincoln Educational |
Biglari Holdings and Lincoln Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Lincoln Educational
The main advantage of trading using opposite Biglari Holdings and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings 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.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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