Correlation Between Lincoln Educational and National Waste

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

Diversification Opportunities for Lincoln Educational and National Waste

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Lincoln and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and National Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Waste Management 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 National Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Waste Management has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and National Waste go up and down completely randomly.

Pair Corralation between Lincoln Educational and National Waste

If you would invest  0.01  in National Waste Management on October 9, 2024 and sell it today you would earn a total of  0.00  from holding National Waste Management or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lincoln Educational Services  vs.  National Waste Management

 Performance 
       Timeline  
Lincoln Educational 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 11 (%) 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.
National Waste Management 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days National Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National Waste is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Lincoln Educational and National Waste Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lincoln Educational and National Waste

The main advantage of trading using opposite Lincoln Educational and National Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, National Waste 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 National Waste will offset losses from the drop in National Waste's long position.
The idea behind Lincoln Educational Services and National Waste Management 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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