Correlation Between Lincoln Educational and Aldel Financial

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

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

Diversification Opportunities for Lincoln Educational and Aldel Financial

-0.27

Correlation Coefficient

Lincoln Educational  Aldel Financial

Very good diversification

The 3 months correlation between Lincoln and Aldel is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Lincoln Educational 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 Lincoln Educational Services are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Aldel Financial go up and down completely randomly.

Pair Corralation between Lincoln Educational and Aldel Financial

Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 23.33 times more return on investment than Aldel Financial. However, Lincoln Educational is 23.33 times more volatile than Aldel Financial II. It trades about 0.1 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.23 per unit of risk. If you would invest  928.00  in Lincoln Educational Services on October 24, 2024 and sell it today you would earn a total of  659.00  from holding Lincoln Educational Services or generate 71.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	9.72%
Values	Daily Returns

Lincoln Educational Services  vs.  Aldel Financial II

Lincoln Educational

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aldel Financial II

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lincoln Educational and Aldel Financial

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

The idea behind Lincoln Educational Services and Aldel Financial II 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.