Correlation Between Lendlease and VIRG NATL
Can any of the company-specific risk be diversified away by investing in both Lendlease and VIRG NATL 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 VIRG NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and VIRG NATL BANKSH, you can compare the effects of market volatilities on Lendlease and VIRG NATL 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 VIRG NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and VIRG NATL.
Diversification Opportunities for Lendlease and VIRG NATL
Significant diversification
The 3 months correlation between Lendlease and VIRG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH 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 VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of Lendlease i.e., Lendlease and VIRG NATL go up and down completely randomly.
Pair Corralation between Lendlease and VIRG NATL
Assuming the 90 days trading horizon Lendlease is expected to generate 2.46 times less return on investment than VIRG NATL. But when comparing it to its historical volatility, Lendlease Group is 1.64 times less risky than VIRG NATL. It trades about 0.09 of its potential returns per unit of risk. VIRG NATL BANKSH is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,641 in VIRG NATL BANKSH on August 29, 2024 and sell it today you would earn a total of 1,339 from holding VIRG NATL BANKSH or generate 50.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. VIRG NATL BANKSH
Performance |
| Timeline |
| Lendlease Group |
| VIRG NATL BANKSH |
Lendlease and VIRG NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and VIRG NATL
The main advantage of trading using opposite Lendlease and VIRG NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, VIRG NATL 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 VIRG NATL will offset losses from the drop in VIRG NATL's long position.The idea behind Lendlease Group and VIRG NATL BANKSH 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.| VIRG NATL vs. Perseus Mining Limited | VIRG NATL vs. Calibre Mining Corp | VIRG NATL vs. Dairy Farm International | VIRG NATL vs. ScanSource |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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