Correlation Between Lincoln Educational and RDVA

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

Diversification Opportunities for Lincoln Educational and RDVA

-0.31

Correlation Coefficient

Lincoln Educational  RDVA

Very good diversification

The 3 months correlation between Lincoln and RDVA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and RDVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDVA Inc 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 RDVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDVA Inc has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and RDVA go up and down completely randomly.

Pair Corralation between Lincoln Educational and RDVA

If you would invest  1,194  in Lincoln Educational Services on August 30, 2024 and sell it today you would earn a total of  455.00  from holding Lincoln Educational Services or generate 38.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lincoln Educational Services  vs.  RDVA Inc

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 uncertain basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

RDVA Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RDVA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lincoln Educational and RDVA

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

The idea behind Lincoln Educational Services and RDVA Inc 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 Stocks Directory module to find actively traded stocks across global markets.