Correlation Between Lincoln Educational and Canlan Ice

Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on Lincoln Educational and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Canlan Ice.

Diversification Opportunities for Lincoln Educational and Canlan Ice

0.27

Correlation Coefficient

Lincoln Educational  Canlan Ice

Modest diversification

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

Pair Corralation between Lincoln Educational and Canlan Ice

If you would invest  1,194  in Lincoln Educational Services on September 30, 2024 and sell it today you would earn a total of  348.00  from holding Lincoln Educational Services or generate 29.15% return on investment over 90 days.

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

Lincoln Educational Services  vs.  Canlan Ice Sports

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 inconsistent basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Canlan Ice Sports

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lincoln Educational and Canlan Ice

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

The idea behind Lincoln Educational Services and Canlan Ice Sports 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.