Correlation Between Lendlease and G8 EDUCATION
Can any of the company-specific risk be diversified away by investing in both Lendlease and G8 EDUCATION 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 G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and G8 EDUCATION, you can compare the effects of market volatilities on Lendlease and G8 EDUCATION 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 G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and G8 EDUCATION.
Diversification Opportunities for Lendlease and G8 EDUCATION
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lendlease and 3EAG is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION 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 G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of Lendlease i.e., Lendlease and G8 EDUCATION go up and down completely randomly.
Pair Corralation between Lendlease and G8 EDUCATION
Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.91 times more return on investment than G8 EDUCATION. However, Lendlease Group is 1.1 times less risky than G8 EDUCATION. It trades about 0.21 of its potential returns per unit of risk. G8 EDUCATION is currently generating about 0.08 per unit of risk. If you would invest 405.00 in Lendlease Group on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Lendlease Group or generate 6.67% 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. G8 EDUCATION
Performance |
| Timeline |
| Lendlease Group |
| G8 EDUCATION |
Lendlease and G8 EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and G8 EDUCATION
The main advantage of trading using opposite Lendlease and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.The idea behind Lendlease Group and G8 EDUCATION pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| G8 EDUCATION vs. SIVERS SEMICONDUCTORS AB | G8 EDUCATION vs. Darden Restaurants | G8 EDUCATION vs. Reliance Steel Aluminum | G8 EDUCATION vs. Q2M Managementberatung AG |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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