Correlation Between Lendlease and Transcontinental
Can any of the company-specific risk be diversified away by investing in both Lendlease and Transcontinental 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 Transcontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Transcontinental, you can compare the effects of market volatilities on Lendlease and Transcontinental 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 Transcontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Transcontinental.
Diversification Opportunities for Lendlease and Transcontinental
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lendlease and Transcontinental is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental 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 Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Lendlease i.e., Lendlease and Transcontinental go up and down completely randomly.
Pair Corralation between Lendlease and Transcontinental
Assuming the 90 days trading horizon Lendlease is expected to generate 4.88 times less return on investment than Transcontinental. In addition to that, Lendlease is 1.28 times more volatile than Transcontinental. It trades about 0.02 of its total potential returns per unit of risk. Transcontinental is currently generating about 0.11 per unit of volatility. If you would invest 1,020 in Transcontinental on October 26, 2024 and sell it today you would earn a total of 190.00 from holding Transcontinental or generate 18.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Transcontinental
Performance |
| Timeline |
| Lendlease Group |
| Transcontinental |
Lendlease and Transcontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Transcontinental
The main advantage of trading using opposite Lendlease and Transcontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Transcontinental 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 Transcontinental will offset losses from the drop in Transcontinental's long position.| Lendlease vs. VIENNA INSURANCE GR | Lendlease vs. Sims Metal Management | Lendlease vs. Corporate Travel Management | Lendlease vs. United Insurance Holdings |
| Transcontinental vs. AGNC INVESTMENT | Transcontinental vs. WILLIS LEASE FIN | Transcontinental vs. Japan Asia Investment | Transcontinental vs. Lendlease 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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