Correlation Between Lendlease and Woolworths
Can any of the company-specific risk be diversified away by investing in both Lendlease and Woolworths 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 Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Woolworths, you can compare the effects of market volatilities on Lendlease and Woolworths 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 Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Woolworths.
Diversification Opportunities for Lendlease and Woolworths
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lendlease and Woolworths is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Lendlease i.e., Lendlease and Woolworths go up and down completely randomly.
Pair Corralation between Lendlease and Woolworths
Assuming the 90 days trading horizon Lendlease Group is expected to generate 2.1 times more return on investment than Woolworths. However, Lendlease is 2.1 times more volatile than Woolworths. It trades about 0.19 of its potential returns per unit of risk. Woolworths is currently generating about 0.07 per unit of risk. If you would invest 677.00 in Lendlease Group on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Lendlease Group or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Woolworths
Performance |
| Timeline |
| Lendlease Group |
| Woolworths |
Lendlease and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Woolworths
The main advantage of trading using opposite Lendlease and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' long position.| Lendlease vs. GDI Property Group | Lendlease vs. Champion Iron | Lendlease vs. iShares Global Healthcare | Lendlease vs. Peel Mining |
| Woolworths vs. BSP Financial Group | Woolworths vs. Credit Clear | Woolworths vs. Lendlease Group | Woolworths vs. MA Financial Group |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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