Correlation Between Lendlease and Australia
Can any of the company-specific risk be diversified away by investing in both Lendlease and Australia 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 Lendlease and Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Australia and New, you can compare the effects of market volatilities on Lendlease and Australia 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 Lendlease with a short position of Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Australia.
Diversification Opportunities for Lendlease and Australia
Very good diversification
The 3 months correlation between Lendlease and Australia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New and Lendlease 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 Lendlease Group are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Lendlease i.e., Lendlease and Australia go up and down completely randomly.
Pair Corralation between Lendlease and Australia
Assuming the 90 days trading horizon Lendlease is expected to generate 1.44 times less return on investment than Australia. In addition to that, Lendlease is 6.12 times more volatile than Australia and New. It trades about 0.01 of its total potential returns per unit of risk. Australia and New is currently generating about 0.11 per unit of volatility. If you would invest 9,888 in Australia and New on September 5, 2024 and sell it today you would earn a total of 602.00 from holding Australia and New or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 35.27% |
| Values | Daily Returns |
Lendlease Group vs. Australia and New
Performance |
| Timeline |
| Lendlease Group |
| Australia and New |
Lendlease and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Australia
The main advantage of trading using opposite Lendlease and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.| Lendlease vs. Scentre Group | Lendlease vs. Vicinity Centres Re | Lendlease vs. Charter Hall Retail | Lendlease vs. Cromwell Property Group |
| Australia vs. Land Homes Group | Australia vs. 29Metals | Australia vs. Dug Technology | Australia vs. Australian Agricultural |
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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