Correlation Between Lincoln Educational and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and KVH Industries 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 KVH Industries 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 KVH Industries, you can compare the effects of market volatilities on Lincoln Educational and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and KVH Industries.
Diversification Opportunities for Lincoln Educational and KVH Industries
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and KVH is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and KVH Industries go up and down completely randomly.
Pair Corralation between Lincoln Educational and KVH Industries
Given the investment horizon of 90 days Lincoln Educational is expected to generate 105.25 times less return on investment than KVH Industries. In addition to that, Lincoln Educational is 1.01 times more volatile than KVH Industries. It trades about 0.0 of its total potential returns per unit of risk. KVH Industries is currently generating about 0.46 per unit of volatility. If you would invest 470.00 in KVH Industries on September 12, 2024 and sell it today you would earn a total of 102.00 from holding KVH Industries or generate 21.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Educational Services vs. KVH Industries
Performance |
| Timeline |
| Lincoln Educational |
| KVH Industries |
Lincoln Educational and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and KVH Industries
The main advantage of trading using opposite Lincoln Educational and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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