Correlation Between Cars and Lendlease
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Lendlease Group, you can compare the effects of market volatilities on Cars 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 Cars with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Lendlease.
Diversification Opportunities for Cars and Lendlease
Very good diversification
The 3 months correlation between Cars and Lendlease is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Cars 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 Cars Inc 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 Cars i.e., Cars and Lendlease go up and down completely randomly.
Pair Corralation between Cars and Lendlease
Assuming the 90 days horizon Cars Inc is expected to generate 2.22 times more return on investment than Lendlease. However, Cars is 2.22 times more volatile than Lendlease Group. It trades about 0.27 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.1 per unit of risk. If you would invest 1,490 in Cars Inc on August 28, 2024 and sell it today you would earn a total of 260.00 from holding Cars Inc or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Lendlease Group
Performance |
| Timeline |
| Cars Inc |
| Lendlease Group |
Cars and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Lendlease
The main advantage of trading using opposite Cars and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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.| Cars vs. Superior Plus Corp | Cars vs. NMI Holdings | Cars vs. Origin Agritech | Cars vs. SIVERS SEMICONDUCTORS AB |
| Lendlease vs. Singapore Telecommunications Limited | Lendlease vs. ANTA SPORTS PRODUCT | Lendlease vs. USWE SPORTS AB | Lendlease vs. Fukuyama Transporting Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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