Correlation Between Lincoln Educational and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Sonida Senior 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 Sonida Senior 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 Sonida Senior Living, you can compare the effects of market volatilities on Lincoln Educational and Sonida Senior 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 Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Sonida Senior.
Diversification Opportunities for Lincoln Educational and Sonida Senior
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lincoln and Sonida is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living 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 Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Sonida Senior go up and down completely randomly.
Pair Corralation between Lincoln Educational and Sonida Senior
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.64 times more return on investment than Sonida Senior. However, Lincoln Educational Services is 1.56 times less risky than Sonida Senior. It trades about 0.13 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.01 per unit of risk. If you would invest 1,114 in Lincoln Educational Services on September 2, 2024 and sell it today you would earn a total of 529.00 from holding Lincoln Educational Services or generate 47.49% 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. Sonida Senior Living
Performance |
| Timeline |
| Lincoln Educational |
| Sonida Senior Living |
Lincoln Educational and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and Sonida Senior
The main advantage of trading using opposite Lincoln Educational and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, Sonida Senior 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 Sonida Senior will offset losses from the drop in Sonida Senior'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 |
| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. InnovAge Holding Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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