Correlation Between LRN and Definitive

Can any of the company-specific risk be diversified away by investing in both LRN and Definitive 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 LRN and Definitive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LRN and Definitive, you can compare the effects of market volatilities on LRN and Definitive 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 LRN with a short position of Definitive. Check out your portfolio center. Please also check ongoing floating volatility patterns of LRN and Definitive.

Diversification Opportunities for LRN and Definitive

0.34

Correlation Coefficient

LRN  Definitive

Weak diversification

The 3 months correlation between LRN and Definitive is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LRN and Definitive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive and LRN 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 LRN are associated (or correlated) with Definitive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive has no effect on the direction of LRN i.e., LRN and Definitive go up and down completely randomly.

Pair Corralation between LRN and Definitive

Assuming the 90 days trading horizon LRN is expected to generate 1.58 times more return on investment than Definitive. However, LRN is 1.58 times more volatile than Definitive. It trades about 0.0 of its potential returns per unit of risk. Definitive is currently generating about -0.07 per unit of risk. If you would invest  0.45  in LRN on September 10, 2025 and sell it today you would lose (0.26) from holding LRN or give up 57.81% of portfolio value over 90 days.

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

LRN  vs.  Definitive

LRN

Risk-Adjusted Performance

Weakest

Over the last 90 days LRN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, LRN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Definitive

Risk-Adjusted Performance

Weakest

Over the last 90 days Definitive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in January 2026. The latest tumult may also be a sign of longer-term up-swing for Definitive shareholders.

Pair Trading with LRN and Definitive

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

The idea behind LRN and Definitive 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.