Correlation Between Lincoln Educational and 17 Education

Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and 17 Education 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 17 Education 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 17 Education Technology, you can compare the effects of market volatilities on Lincoln Educational and 17 Education 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 17 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and 17 Education.

Diversification Opportunities for Lincoln Educational and 17 Education

0.28

Correlation Coefficient

Lincoln Educational  17 Education

Modest diversification

The 3 months correlation between Lincoln and 17 Education is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and 17 Education Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 17 Education Technology 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 17 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 17 Education Technology has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and 17 Education go up and down completely randomly.

Pair Corralation between Lincoln Educational and 17 Education

Given the investment horizon of 90 days Lincoln Educational is expected to generate 3.31 times less return on investment than 17 Education. But when comparing it to its historical volatility, Lincoln Educational Services is 1.54 times less risky than 17 Education. It trades about 0.01 of its potential returns per unit of risk. 17 Education Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  159.00  in 17 Education Technology on December 30, 2024 and sell it today you would earn a total of  1.00  from holding 17 Education Technology or generate 0.63% 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.  17 Education Technology

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.

17 Education Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 17 Education Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, 17 Education may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lincoln Educational and 17 Education

The main advantage of trading using opposite Lincoln Educational and 17 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, 17 Education 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 17 Education will offset losses from the drop in 17 Education's long position.

The idea behind Lincoln Educational Services and 17 Education Technology 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 Anywhere module to track or share privately all of your investments from the convenience of any device.