Correlation Between Lincoln Educational and Grand Canyon

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

Diversification Opportunities for Lincoln Educational and Grand Canyon

0.86

Correlation Coefficient

Lincoln Educational  Grand Canyon

Very poor diversification

The 3 months correlation between Lincoln and Grand is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Grand Canyon go up and down completely randomly.

Pair Corralation between Lincoln Educational and Grand Canyon

Given the investment horizon of 90 days Lincoln Educational is expected to generate 2.56 times less return on investment than Grand Canyon. In addition to that, Lincoln Educational is 2.52 times more volatile than Grand Canyon Education. It trades about 0.01 of its total potential returns per unit of risk. Grand Canyon Education is currently generating about 0.09 per unit of volatility. If you would invest  16,350  in Grand Canyon Education on December 28, 2024 and sell it today you would earn a total of  1,144  from holding Grand Canyon Education or generate 7.0% return on investment over 90 days.

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

Lincoln Educational Services  vs.  Grand Canyon Education

Lincoln Educational

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Grand Canyon Education

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Grand Canyon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lincoln Educational and Grand Canyon

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

The idea behind Lincoln Educational Services and Grand Canyon 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .