Correlation Between FireFly Metals and Lendlease
Can any of the company-specific risk be diversified away by investing in both FireFly Metals 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 FireFly Metals and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FireFly Metals and Lendlease Group, you can compare the effects of market volatilities on FireFly Metals 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 FireFly Metals with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of FireFly Metals and Lendlease.
Diversification Opportunities for FireFly Metals and Lendlease
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FireFly and Lendlease is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FireFly Metals and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and FireFly Metals 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 FireFly Metals 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 FireFly Metals i.e., FireFly Metals and Lendlease go up and down completely randomly.
Pair Corralation between FireFly Metals and Lendlease
Assuming the 90 days trading horizon FireFly Metals is expected to generate 2.46 times more return on investment than Lendlease. However, FireFly Metals is 2.46 times more volatile than Lendlease Group. It trades about 0.03 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.02 per unit of risk. If you would invest 87.00 in FireFly Metals on October 13, 2024 and sell it today you would earn a total of 10.00 from holding FireFly Metals or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FireFly Metals vs. Lendlease Group
Performance |
| Timeline |
| FireFly Metals |
| Lendlease Group |
FireFly Metals and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FireFly Metals and Lendlease
The main advantage of trading using opposite FireFly Metals and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FireFly Metals 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.| FireFly Metals vs. Queste Communications | FireFly Metals vs. Hutchison Telecommunications | FireFly Metals vs. Garda Diversified Ppty | FireFly Metals vs. Carawine Resources Limited |
| Lendlease vs. Sky Metals | Lendlease vs. FireFly Metals | Lendlease vs. Centaurus Metals | Lendlease vs. Autosports Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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