Correlation Between Arco Platform and Lincoln Educational

Can any of the company-specific risk be diversified away by investing in both Arco Platform 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 Arco Platform and Lincoln Educational into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arco Platform and Lincoln Educational Services, you can compare the effects of market volatilities on Arco Platform 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 Arco Platform with a short position of Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arco Platform and Lincoln Educational.

Diversification Opportunities for Arco Platform and Lincoln Educational

0.0

Correlation Coefficient

Arco Platform  Lincoln Educational

Pay attention - limited upside

The 3 months correlation between Arco and Lincoln is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arco Platform and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and Arco Platform 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 Arco Platform 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 Arco Platform i.e., Arco Platform and Lincoln Educational go up and down completely randomly.

Pair Corralation between Arco Platform and Lincoln Educational

If you would invest  1,581  in Lincoln Educational Services on December 28, 2024 and sell it today you would earn a total of  19.00  from holding Lincoln Educational Services or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Arco Platform  vs.  Lincoln Educational Services

Arco Platform

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arco Platform has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Arco Platform is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lincoln Educational

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Lincoln Educational is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Arco Platform and Lincoln Educational

The main advantage of trading using opposite Arco Platform and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arco Platform 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.

The idea behind Arco Platform and Lincoln Educational Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.