Correlation Between Lincoln Educational and BTC Digital
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and BTC Digital 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 Lincoln Educational and BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln Educational Services and BTC Digital, you can compare the effects of market volatilities on Lincoln Educational and BTC Digital 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 Lincoln Educational with a short position of BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and BTC Digital.
Diversification Opportunities for Lincoln Educational and BTC Digital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and BTC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital and Lincoln Educational 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 Lincoln Educational Services are associated (or correlated) with BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and BTC Digital go up and down completely randomly.
Pair Corralation between Lincoln Educational and BTC Digital
Given the investment horizon of 90 days Lincoln Educational is expected to generate 13.79 times less return on investment than BTC Digital. But when comparing it to its historical volatility, Lincoln Educational Services is 11.34 times less risky than BTC Digital. It trades about 0.09 of its potential returns per unit of risk. BTC Digital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3.62 in BTC Digital on September 2, 2024 and sell it today you would earn a total of 2.95 from holding BTC Digital or generate 81.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.43% |
| Values | Daily Returns |
Lincoln Educational Services vs. BTC Digital
Performance |
| Timeline |
| Lincoln Educational |
| BTC Digital |
Lincoln Educational and BTC Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and BTC Digital
The main advantage of trading using opposite Lincoln Educational and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, BTC Digital 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 BTC Digital will offset losses from the drop in BTC Digital's long position.| Lincoln Educational vs. American Public Education | Lincoln Educational vs. ATA Creativity Global | Lincoln Educational vs. Cogna Educacao SA | Lincoln Educational vs. Adtalem Global Education |
| BTC Digital vs. Hyatt Hotels | BTC Digital vs. Biglari Holdings | BTC Digital vs. Smart Share Global | BTC Digital vs. Sweetgreen |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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