Correlation Between Lincoln Educational and Xponential Fitness

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

Diversification Opportunities for Lincoln Educational and Xponential Fitness

0.27

Correlation Coefficient

Lincoln Educational  Xponential Fitness

Modest diversification

The 3 months correlation between Lincoln and Xponential is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Xponential Fitness go up and down completely randomly.

Pair Corralation between Lincoln Educational and Xponential Fitness

Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.52 times more return on investment than Xponential Fitness. However, Lincoln Educational Services is 1.94 times less risky than Xponential Fitness. It trades about 0.1 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.03 per unit of risk. If you would invest  992.00  in Lincoln Educational Services on December 4, 2024 and sell it today you would earn a total of  827.00  from holding Lincoln Educational Services or generate 83.37% 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.  Xponential Fitness

Lincoln Educational

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 6 (%) 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.

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lincoln Educational and Xponential Fitness

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

The idea behind Lincoln Educational Services and Xponential Fitness 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.