Correlation Between Greentown Management and Lincoln Educational

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

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

Diversification Opportunities for Greentown Management and Lincoln Educational

0.0

Correlation Coefficient

Greentown Management  Lincoln Educational

Pay attention - limited upside

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

Pair Corralation between Greentown Management and Lincoln Educational

If you would invest  1,516  in Lincoln Educational Services on December 22, 2024 and sell it today you would lose (17.00) from holding Lincoln Educational Services or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Greentown Management Holdings  vs.  Lincoln Educational Services

Greentown Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greentown Management Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Greentown Management is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lincoln Educational

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lincoln Educational Services has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Greentown Management and Lincoln Educational

The main advantage of trading using opposite Greentown Management and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greentown Management 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 Greentown Management Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.