Correlation Between Salesforce and Lincoln Educational

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

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

Diversification Opportunities for Salesforce and Lincoln Educational

0.1

Correlation Coefficient

Salesforce  Lincoln Educational

Average diversification

The 3 months correlation between Salesforce and Lincoln is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and Salesforce 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 Salesforce 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 Salesforce i.e., Salesforce and Lincoln Educational go up and down completely randomly.

Pair Corralation between Salesforce and Lincoln Educational

Considering the 90-day investment horizon Salesforce is expected to under-perform the Lincoln Educational. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.85 times less risky than Lincoln Educational. The stock trades about -0.18 of its potential returns per unit of risk. The Lincoln Educational Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,581  in Lincoln Educational Services on December 30, 2024 and sell it today you would lose (10.00) from holding Lincoln Educational Services or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Lincoln Educational Services

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 Salesforce and Lincoln Educational

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

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.