Correlation Between Lincoln Educational and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Mesa Air 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 Mesa Air 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 Mesa Air Group, you can compare the effects of market volatilities on Lincoln Educational and Mesa Air 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 Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Mesa Air.
Diversification Opportunities for Lincoln Educational and Mesa Air
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lincoln and Mesa is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group 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 Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Mesa Air go up and down completely randomly.
Pair Corralation between Lincoln Educational and Mesa Air
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.78 times more return on investment than Mesa Air. However, Lincoln Educational Services is 1.28 times less risky than Mesa Air. It trades about 0.32 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.2 per unit of risk. If you would invest 1,328 in Lincoln Educational Services on September 1, 2024 and sell it today you would earn a total of 315.00 from holding Lincoln Educational Services or generate 23.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Educational Services vs. Mesa Air Group
Performance |
| Timeline |
| Lincoln Educational |
| Mesa Air Group |
Lincoln Educational and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and Mesa Air
The main advantage of trading using opposite Lincoln Educational and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, Mesa Air 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 Mesa Air will offset losses from the drop in Mesa Air'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 |
| Mesa Air vs. Canadian Pacific Railway | Mesa Air vs. Volaris | Mesa Air vs. Werner Enterprises | Mesa Air vs. Canadian National Railway |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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