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 |
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
Performance |
Timeline |
Lincoln Educational |
Grand Canyon Education |
Lincoln Educational and Grand Canyon Volatility Contrast
Predicted Return Density |
Returns |
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.Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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