Correlation Between Scholastic and Lincoln Educational
Can any of the company-specific risk be diversified away by investing in both Scholastic and Lincoln Educational 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 Scholastic and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and Lincoln Educational Services, you can compare the effects of market volatilities on Scholastic and Lincoln Educational 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 Scholastic with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and Lincoln Educational.
Diversification Opportunities for Scholastic and Lincoln Educational
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scholastic and Lincoln is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and Scholastic 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 Scholastic are associated (or correlated) with Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of Scholastic i.e., Scholastic and Lincoln Educational go up and down completely randomly.
Pair Corralation between Scholastic and Lincoln Educational
Given the investment horizon of 90 days Scholastic is expected to under-perform the Lincoln Educational. But the stock apears to be less risky and, when comparing its historical volatility, Scholastic is 1.04 times less risky than Lincoln Educational. The stock trades about -0.01 of its potential returns per unit of risk. The Lincoln Educational Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 592.00 in Lincoln Educational Services on August 30, 2024 and sell it today you would earn a total of 1,057 from holding Lincoln Educational Services or generate 178.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholastic vs. Lincoln Educational Services
Performance |
| Timeline |
| Scholastic |
| Lincoln Educational |
Scholastic and Lincoln Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholastic and Lincoln Educational
The main advantage of trading using opposite Scholastic and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic position performs unexpectedly, Lincoln Educational 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 Lincoln Educational will offset losses from the drop in Lincoln Educational's long position.| Scholastic vs. John Wiley Sons | Scholastic vs. Pearson PLC ADR | Scholastic vs. New York Times | Scholastic vs. Lee Enterprises Incorporated |
| Lincoln Educational vs. Gaotu Techedu DRC | Lincoln Educational vs. TAL Education Group | Lincoln Educational vs. Strategic Education | Lincoln Educational vs. Vasta Platform |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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