Correlation Between Leef Brands and Lincoln Educational

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

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

Diversification Opportunities for Leef Brands and Lincoln Educational

0.26

Correlation Coefficient

Leef Brands  Lincoln Educational

Modest diversification

The 3 months correlation between Leef and Lincoln is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Leef Brands and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational and Leef Brands 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 Leef Brands 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 Leef Brands i.e., Leef Brands and Lincoln Educational go up and down completely randomly.

Pair Corralation between Leef Brands and Lincoln Educational

Assuming the 90 days horizon Leef Brands is expected to under-perform the Lincoln Educational. In addition to that, Leef Brands is 2.54 times more volatile than Lincoln Educational Services. It trades about -0.04 of its total potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.02 per unit of volatility. If you would invest  1,581  in Lincoln Educational Services on December 29, 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	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Leef Brands  vs.  Lincoln Educational Services

Leef Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leef Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Leef Brands and Lincoln Educational

The main advantage of trading using opposite Leef Brands and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leef Brands 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 Leef Brands 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.