Correlation Between Lendlease and Odyssey Energy
Can any of the company-specific risk be diversified away by investing in both Lendlease and Odyssey Energy 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 Odyssey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Odyssey Energy, you can compare the effects of market volatilities on Lendlease and Odyssey Energy 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 Odyssey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Odyssey Energy.
Diversification Opportunities for Lendlease and Odyssey Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lendlease and Odyssey is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy 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 Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Lendlease i.e., Lendlease and Odyssey Energy go up and down completely randomly.
Pair Corralation between Lendlease and Odyssey Energy
Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.28 times more return on investment than Odyssey Energy. However, Lendlease Group is 3.53 times less risky than Odyssey Energy. It trades about 0.21 of its potential returns per unit of risk. Odyssey Energy is currently generating about -0.06 per unit of risk. If you would invest 672.00 in Lendlease Group on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Lendlease Group or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Odyssey Energy
Performance |
| Timeline |
| Lendlease Group |
| Odyssey Energy |
Lendlease and Odyssey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Odyssey Energy
The main advantage of trading using opposite Lendlease and Odyssey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Odyssey Energy 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 Odyssey Energy will offset losses from the drop in Odyssey Energy's long position.| Lendlease vs. Scentre Group | Lendlease vs. Vicinity Centres Re | Lendlease vs. Charter Hall Retail | Lendlease vs. Cromwell Property Group |
| Odyssey Energy vs. Hudson Investment Group | Odyssey Energy vs. Carlton Investments | Odyssey Energy vs. Neurotech International | Odyssey Energy vs. Ras Technology Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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