Correlation Between Lincoln Educational and New Horizon
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and New Horizon 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 New Horizon 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 New Horizon Aircraft, you can compare the effects of market volatilities on Lincoln Educational and New Horizon 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 New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and New Horizon.
Diversification Opportunities for Lincoln Educational and New Horizon
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lincoln and New is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and New Horizon go up and down completely randomly.
Pair Corralation between Lincoln Educational and New Horizon
Given the investment horizon of 90 days Lincoln Educational is expected to generate 3.29 times less return on investment than New Horizon. But when comparing it to its historical volatility, Lincoln Educational Services is 4.4 times less risky than New Horizon. It trades about 0.32 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 26.00 in New Horizon Aircraft on September 3, 2024 and sell it today you would earn a total of 42.00 from holding New Horizon Aircraft or generate 161.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Educational Services vs. New Horizon Aircraft
Performance |
| Timeline |
| Lincoln Educational |
| New Horizon Aircraft |
Lincoln Educational and New Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and New Horizon
The main advantage of trading using opposite Lincoln Educational and New Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, New Horizon 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 New Horizon will offset losses from the drop in New Horizon's long position.| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
| New Horizon vs. Ralph Lauren Corp | New Horizon vs. Mill City Ventures | New Horizon vs. Glacier Bancorp | New Horizon vs. Tandy Leather Factory |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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