Correlation Between Valens and Lincoln Educational
Can any of the company-specific risk be diversified away by investing in both Valens 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 Valens and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and Lincoln Educational Services, you can compare the effects of market volatilities on Valens 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 Valens with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Lincoln Educational.
Diversification Opportunities for Valens and Lincoln Educational
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valens and Lincoln is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and Valens 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 Valens 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 Valens i.e., Valens and Lincoln Educational go up and down completely randomly.
Pair Corralation between Valens and Lincoln Educational
Considering the 90-day investment horizon Valens is expected to generate 2.81 times more return on investment than Lincoln Educational. However, Valens is 2.81 times more volatile than Lincoln Educational Services. It trades about 0.09 of its potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.0 per unit of risk. If you would invest 187.00 in Valens on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Valens or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Valens vs. Lincoln Educational Services
Performance |
| Timeline |
| Valens |
| Lincoln Educational |
Valens and Lincoln Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and Lincoln Educational
The main advantage of trading using opposite Valens and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens 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.| Valens vs. NVIDIA | Valens vs. Taiwan Semiconductor Manufacturing | Valens vs. Micron Technology | Valens vs. Qualcomm Incorporated |
| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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