Correlation Between Autosports and Lendlease
Can any of the company-specific risk be diversified away by investing in both Autosports and Lendlease 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 Autosports and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Lendlease Group, you can compare the effects of market volatilities on Autosports and Lendlease 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 Autosports with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Lendlease.
Diversification Opportunities for Autosports and Lendlease
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autosports and Lendlease is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Autosports 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 Autosports Group are associated (or correlated) with Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of Autosports i.e., Autosports and Lendlease go up and down completely randomly.
Pair Corralation between Autosports and Lendlease
Assuming the 90 days trading horizon Autosports Group is expected to under-perform the Lendlease. In addition to that, Autosports is 1.39 times more volatile than Lendlease Group. It trades about -0.07 of its total potential returns per unit of risk. Lendlease Group is currently generating about 0.04 per unit of volatility. If you would invest 664.00 in Lendlease Group on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Lendlease Group or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. Lendlease Group
Performance |
| Timeline |
| Autosports Group |
| Lendlease Group |
Autosports and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Lendlease
The main advantage of trading using opposite Autosports and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease's long position.| Autosports vs. Summit Resources Limited | Autosports vs. Champion Iron | Autosports vs. Ridley | Autosports vs. Peel Mining |
| Lendlease vs. Australian United Investment | Lendlease vs. Clime Investment Management | Lendlease vs. Mirrabooka Investments | Lendlease vs. Sandon Capital Investments |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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