Correlation Between Stora Enso and Lendlease
Can any of the company-specific risk be diversified away by investing in both Stora Enso 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 Stora Enso and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stora Enso Oyj and Lendlease Group, you can compare the effects of market volatilities on Stora Enso 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 Stora Enso with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stora Enso and Lendlease.
Diversification Opportunities for Stora Enso and Lendlease
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stora and Lendlease is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stora Enso Oyj and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Stora Enso 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 Stora Enso Oyj 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 Stora Enso i.e., Stora Enso and Lendlease go up and down completely randomly.
Pair Corralation between Stora Enso and Lendlease
Assuming the 90 days trading horizon Stora Enso Oyj is expected to under-perform the Lendlease. But the stock apears to be less risky and, when comparing its historical volatility, Stora Enso Oyj is 1.53 times less risky than Lendlease. The stock trades about -0.53 of its potential returns per unit of risk. The Lendlease Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 406.00 in Lendlease Group on September 4, 2024 and sell it today you would earn a total of 31.00 from holding Lendlease Group or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stora Enso Oyj vs. Lendlease Group
Performance |
| Timeline |
| Stora Enso Oyj |
| Lendlease Group |
Stora Enso and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stora Enso and Lendlease
The main advantage of trading using opposite Stora Enso and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stora Enso 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.| Stora Enso vs. Lendlease Group | Stora Enso vs. Gruppo Mutuionline SpA | Stora Enso vs. FUYO GENERAL LEASE | Stora Enso vs. Lion One Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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