Correlation Between Lindblad Expeditions and Sterling Construction

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

By analyzing existing cross correlation between Lindblad Expeditions Holdings and Sterling Construction, you can compare the effects of market volatilities on Lindblad Expeditions and Sterling Construction 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 Lindblad Expeditions with a short position of Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindblad Expeditions and Sterling Construction.

Diversification Opportunities for Lindblad Expeditions and Sterling Construction

0.88

Correlation Coefficient

Lindblad Expeditions  Sterling Construction

Very poor diversification

The 3 months correlation between Lindblad and Sterling is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and Lindblad Expeditions 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 Lindblad Expeditions Holdings are associated (or correlated) with Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Lindblad Expeditions i.e., Lindblad Expeditions and Sterling Construction go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Sterling Construction

Assuming the 90 days horizon Lindblad Expeditions is expected to generate 1.15 times less return on investment than Sterling Construction. In addition to that, Lindblad Expeditions is 1.63 times more volatile than Sterling Construction. It trades about 0.14 of its total potential returns per unit of risk. Sterling Construction is currently generating about 0.26 per unit of volatility. If you would invest  10,535  in Sterling Construction on September 11, 2024 and sell it today you would earn a total of  7,650  from holding Sterling Construction or generate 72.62% return on investment over 90 days.

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

Lindblad Expeditions Holdings  vs.  Sterling Construction

Lindblad Expeditions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lindblad Expeditions reported solid returns over the last few months and may actually be approaching a breakup point.

Sterling Construction

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Construction are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sterling Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lindblad Expeditions and Sterling Construction

The main advantage of trading using opposite Lindblad Expeditions and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.

The idea behind Lindblad Expeditions Holdings and Sterling Construction 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.