Correlation Between Iron Road and Lendlease
Can any of the company-specific risk be diversified away by investing in both Iron Road 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 Iron Road and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and Lendlease Group, you can compare the effects of market volatilities on Iron Road 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 Iron Road with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Lendlease.
Diversification Opportunities for Iron Road and Lendlease
Significant diversification
The 3 months correlation between Iron and Lendlease is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Iron Road 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 Iron Road 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 Iron Road i.e., Iron Road and Lendlease go up and down completely randomly.
Pair Corralation between Iron Road and Lendlease
Assuming the 90 days trading horizon Iron Road is expected to generate 3.15 times more return on investment than Lendlease. However, Iron Road is 3.15 times more volatile than Lendlease Group. It trades about 0.0 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.08 per unit of risk. If you would invest 6.10 in Iron Road on August 25, 2024 and sell it today you would lose (0.10) from holding Iron Road or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Iron Road vs. Lendlease Group
Performance |
| Timeline |
| Iron Road |
| Lendlease Group |
Iron Road and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Lendlease
The main advantage of trading using opposite Iron Road and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road 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.| Iron Road vs. Super Retail Group | Iron Road vs. Sky Metals | Iron Road vs. Cleanaway Waste Management | Iron Road vs. Alto Metals |
| Lendlease vs. Hotel Property Investments | Lendlease vs. ACDC Metals | Lendlease vs. Stelar Metals | Lendlease vs. Alternative Investment Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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