Correlation Between Lendlease and BHP Group
Can any of the company-specific risk be diversified away by investing in both Lendlease and BHP Group 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 BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and BHP Group Limited, you can compare the effects of market volatilities on Lendlease and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and BHP Group.
Diversification Opportunities for Lendlease and BHP Group
Significant diversification
The 3 months correlation between Lendlease and BHP is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Lendlease i.e., Lendlease and BHP Group go up and down completely randomly.
Pair Corralation between Lendlease and BHP Group
Assuming the 90 days trading horizon Lendlease is expected to generate 1.75 times less return on investment than BHP Group. In addition to that, Lendlease is 1.38 times more volatile than BHP Group Limited. It trades about 0.0 of its total potential returns per unit of risk. BHP Group Limited is currently generating about 0.01 per unit of volatility. If you would invest 4,142 in BHP Group Limited on September 12, 2024 and sell it today you would earn a total of 41.00 from holding BHP Group Limited or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. BHP Group Limited
Performance |
| Timeline |
| Lendlease Group |
| BHP Group Limited |
Lendlease and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and BHP Group
The main advantage of trading using opposite Lendlease and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Lendlease vs. Spirit Telecom | Lendlease vs. Alto Metals | Lendlease vs. Embark Education Group | Lendlease vs. Charter Hall Retail |
| BHP Group vs. Northern Star Resources | BHP Group vs. Evolution Mining | BHP Group vs. Bluescope Steel | BHP Group vs. Sandfire Resources NL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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