Correlation Between Lincoln Educational and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and BBB Foods 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 BBB Foods 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 BBB Foods, you can compare the effects of market volatilities on Lincoln Educational and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and BBB Foods.
Diversification Opportunities for Lincoln Educational and BBB Foods
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lincoln and BBB is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and BBB Foods go up and down completely randomly.
Pair Corralation between Lincoln Educational and BBB Foods
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 1.13 times more return on investment than BBB Foods. However, Lincoln Educational is 1.13 times more volatile than BBB Foods. It trades about 0.12 of its potential returns per unit of risk. BBB Foods is currently generating about -0.01 per unit of risk. If you would invest 1,516 in Lincoln Educational Services on October 22, 2024 and sell it today you would earn a total of 72.00 from holding Lincoln Educational Services or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Educational Services vs. BBB Foods
Performance |
| Timeline |
| Lincoln Educational |
| BBB Foods |
Lincoln Educational and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and BBB Foods
The main advantage of trading using opposite Lincoln Educational and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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