Correlation Between Lendlease and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Lendlease and Qantas Airways 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 Qantas Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Qantas Airways, you can compare the effects of market volatilities on Lendlease and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Qantas Airways.
Diversification Opportunities for Lendlease and Qantas Airways
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lendlease and Qantas is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Lendlease i.e., Lendlease and Qantas Airways go up and down completely randomly.
Pair Corralation between Lendlease and Qantas Airways
Assuming the 90 days trading horizon Lendlease is expected to generate 5.19 times less return on investment than Qantas Airways. But when comparing it to its historical volatility, Lendlease Group is 1.94 times less risky than Qantas Airways. It trades about 0.05 of its potential returns per unit of risk. Qantas Airways is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 907.00 in Qantas Airways on October 29, 2024 and sell it today you would earn a total of 39.00 from holding Qantas Airways or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Qantas Airways
Performance |
| Timeline |
| Lendlease Group |
| Qantas Airways |
Lendlease and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Qantas Airways
The main advantage of trading using opposite Lendlease and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| Lendlease vs. Austco Healthcare | Lendlease vs. Sonic Healthcare | Lendlease vs. Vitura Health Limited | Lendlease vs. Fisher Paykel Healthcare |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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