Correlation Between Lincoln Educational and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Westinghouse 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 Westinghouse 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 Westinghouse Air Brake, you can compare the effects of market volatilities on Lincoln Educational and Westinghouse 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Westinghouse Air.
Diversification Opportunities for Lincoln Educational and Westinghouse Air
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lincoln and Westinghouse is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Westinghouse Air go up and down completely randomly.
Pair Corralation between Lincoln Educational and Westinghouse Air
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 2.01 times more return on investment than Westinghouse Air. However, Lincoln Educational is 2.01 times more volatile than Westinghouse Air Brake. It trades about 0.1 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.11 per unit of risk. If you would invest 546.00 in Lincoln Educational Services on September 3, 2024 and sell it today you would earn a total of 1,097 from holding Lincoln Educational Services or generate 200.92% 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. Westinghouse Air Brake
Performance |
| Timeline |
| Lincoln Educational |
| Westinghouse Air Brake |
Lincoln Educational and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and Westinghouse Air
The main advantage of trading using opposite Lincoln Educational and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, Westinghouse 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 Westinghouse Air will offset losses from the drop in Westinghouse Air'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 |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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