Correlation Between Lincoln Educational and Allient

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

Diversification Opportunities for Lincoln Educational and Allient

0.91

Correlation Coefficient

Lincoln Educational  Allient

Almost no diversification

The 3 months correlation between Lincoln and Allient is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Allient go up and down completely randomly.

Pair Corralation between Lincoln Educational and Allient

Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 0.91 times more return on investment than Allient. However, Lincoln Educational Services is 1.1 times less risky than Allient. It trades about 0.19 of its potential returns per unit of risk. Allient is currently generating about 0.15 per unit of risk. If you would invest  1,252  in Lincoln Educational Services on September 18, 2024 and sell it today you would earn a total of  387.00  from holding Lincoln Educational Services or generate 30.91% return on investment over 90 days.

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

Lincoln Educational Services  vs.  Allient

Lincoln Educational

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 14 (%) 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.

Allient

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lincoln Educational and Allient

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

The idea behind Lincoln Educational Services and Allient 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.