Correlation Between Lincoln Educational and Galaxy Gaming

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

Diversification Opportunities for Lincoln Educational and Galaxy Gaming

0.26

Correlation Coefficient

Lincoln Educational  Galaxy Gaming

Modest diversification

The 3 months correlation between Lincoln and Galaxy is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Galaxy Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Gaming 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 Galaxy Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Gaming has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Galaxy Gaming go up and down completely randomly.

Pair Corralation between Lincoln Educational and Galaxy Gaming

Given the investment horizon of 90 days Lincoln Educational is expected to generate 5.82 times less return on investment than Galaxy Gaming. In addition to that, Lincoln Educational is 2.53 times more volatile than Galaxy Gaming. It trades about 0.01 of its total potential returns per unit of risk. Galaxy Gaming is currently generating about 0.1 per unit of volatility. If you would invest  272.00  in Galaxy Gaming on October 25, 2024 and sell it today you would earn a total of  4.00  from holding Galaxy Gaming or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Lincoln Educational Services  vs.  Galaxy Gaming

Lincoln Educational

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 13 (%) 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.

Galaxy Gaming

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Galaxy Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lincoln Educational and Galaxy Gaming

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

The idea behind Lincoln Educational Services and Galaxy Gaming 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.