Correlation Between Lendlease and Sonic Healthcare
Can any of the company-specific risk be diversified away by investing in both Lendlease and Sonic Healthcare 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 Sonic Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Sonic Healthcare, you can compare the effects of market volatilities on Lendlease and Sonic Healthcare 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 Sonic Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Sonic Healthcare.
Diversification Opportunities for Lendlease and Sonic Healthcare
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lendlease and Sonic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Sonic Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Healthcare 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 Sonic Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Healthcare has no effect on the direction of Lendlease i.e., Lendlease and Sonic Healthcare go up and down completely randomly.
Pair Corralation between Lendlease and Sonic Healthcare
Assuming the 90 days trading horizon Lendlease Group is expected to generate 1.39 times more return on investment than Sonic Healthcare. However, Lendlease is 1.39 times more volatile than Sonic Healthcare. It trades about -0.01 of its potential returns per unit of risk. Sonic Healthcare is currently generating about -0.02 per unit of risk. If you would invest 708.00 in Lendlease Group on November 8, 2024 and sell it today you would lose (51.00) from holding Lendlease Group or give up 7.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Sonic Healthcare
Performance |
| Timeline |
| Lendlease Group |
| Sonic Healthcare |
Lendlease and Sonic Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Sonic Healthcare
The main advantage of trading using opposite Lendlease and Sonic Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Sonic Healthcare 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 Sonic Healthcare will offset losses from the drop in Sonic Healthcare's long position.| Lendlease vs. Scentre Group | Lendlease vs. Vicinity Centres Re | Lendlease vs. Charter Hall Retail | Lendlease vs. Cromwell Property Group |
| Sonic Healthcare vs. Autosports Group | Sonic Healthcare vs. Falcon Metals | Sonic Healthcare vs. Truscott Mining Corp | Sonic Healthcare vs. Auctus Alternative Investments |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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