Correlation Between Insignia Financial and Lendlease
Can any of the company-specific risk be diversified away by investing in both Insignia Financial 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 Insignia Financial and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and Lendlease Group, you can compare the effects of market volatilities on Insignia Financial 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 Insignia Financial with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and Lendlease.
Diversification Opportunities for Insignia Financial and Lendlease
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insignia and Lendlease is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Insignia Financial 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 Insignia Financial 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 Insignia Financial i.e., Insignia Financial and Lendlease go up and down completely randomly.
Pair Corralation between Insignia Financial and Lendlease
Assuming the 90 days trading horizon Insignia Financial is expected to generate 1.89 times more return on investment than Lendlease. However, Insignia Financial is 1.89 times more volatile than Lendlease Group. It trades about 0.11 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.03 per unit of risk. If you would invest 226.00 in Insignia Financial on August 24, 2024 and sell it today you would earn a total of 89.00 from holding Insignia Financial or generate 39.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insignia Financial vs. Lendlease Group
Performance |
| Timeline |
| Insignia Financial |
| Lendlease Group |
Insignia Financial and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insignia Financial and Lendlease
The main advantage of trading using opposite Insignia Financial and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial 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.| Insignia Financial vs. Summit Resources Limited | Insignia Financial vs. Champion Iron | Insignia Financial vs. Peel Mining | Insignia Financial vs. Australian Dairy Farms |
| Lendlease vs. Charter Hall Retail | Lendlease vs. Australian Unity Office | Lendlease vs. Champion Iron | Lendlease vs. Peel Mining |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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