Correlation Between Lincoln Educational and Golden Sun

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

Diversification Opportunities for Lincoln Educational and Golden Sun

0.3

Correlation Coefficient

Lincoln Educational  Golden Sun

Weak diversification

The 3 months correlation between Lincoln and Golden is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Golden Sun Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Sun Education 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 Golden Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Sun Education has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Golden Sun go up and down completely randomly.

Pair Corralation between Lincoln Educational and Golden Sun

Given the investment horizon of 90 days Lincoln Educational Services is expected to under-perform the Golden Sun. But the stock apears to be less risky and, when comparing its historical volatility, Lincoln Educational Services is 1.57 times less risky than Golden Sun. The stock trades about -0.11 of its potential returns per unit of risk. The Golden Sun Education is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  284.00  in Golden Sun Education on December 10, 2024 and sell it today you would earn a total of  36.00  from holding Golden Sun Education or generate 12.68% 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.  Golden Sun Education

Lincoln Educational

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lincoln Educational Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lincoln Educational is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Golden Sun Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Sun Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Golden Sun displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lincoln Educational and Golden Sun

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

The idea behind Lincoln Educational Services and Golden Sun Education 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.