Correlation Between Lendlease and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Lendlease and Insignia Financial 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 Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Insignia Financial, you can compare the effects of market volatilities on Lendlease and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Insignia Financial.
Diversification Opportunities for Lendlease and Insignia Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lendlease and Insignia is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Lendlease i.e., Lendlease and Insignia Financial go up and down completely randomly.
Pair Corralation between Lendlease and Insignia Financial
Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.61 times more return on investment than Insignia Financial. However, Lendlease Group is 1.63 times less risky than Insignia Financial. It trades about -0.06 of its potential returns per unit of risk. Insignia Financial is currently generating about -0.12 per unit of risk. If you would invest 676.00 in Lendlease Group on August 27, 2024 and sell it today you would lose (11.00) from holding Lendlease Group or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Insignia Financial
Performance |
| Timeline |
| Lendlease Group |
| Insignia Financial |
Lendlease and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Insignia Financial
The main advantage of trading using opposite Lendlease and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| Lendlease vs. Charter Hall Retail | Lendlease vs. Infomedia | Lendlease vs. Skycity Entertainment Group | Lendlease vs. Nine Entertainment Co |
| Insignia Financial vs. National Australia Bank | Insignia Financial vs. National Australia Bank | Insignia Financial vs. Westpac Banking | Insignia Financial vs. National Australia Bank |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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