Correlation Between Lendlease and Cars
Can any of the company-specific risk be diversified away by investing in both Lendlease and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Cars Inc, you can compare the effects of market volatilities on Lendlease and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Cars.
Diversification Opportunities for Lendlease and Cars
Very good diversification
The 3 months correlation between Lendlease and Cars is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Lendlease i.e., Lendlease and Cars go up and down completely randomly.
Pair Corralation between Lendlease and Cars
Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Cars. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 2.22 times less risky than Cars. The stock trades about -0.02 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,430 in Cars Inc on August 24, 2024 and sell it today you would earn a total of 310.00 from holding Cars Inc or generate 21.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Cars Inc
Performance |
| Timeline |
| Lendlease Group |
| Cars Inc |
Lendlease and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Cars
The main advantage of trading using opposite Lendlease and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Lendlease vs. GEELY AUTOMOBILE | Lendlease vs. Dairy Farm International | Lendlease vs. Cars Inc | Lendlease vs. Geely Automobile Holdings |
| Cars vs. Superior Plus Corp | Cars vs. NMI Holdings | Cars vs. Origin Agritech | Cars vs. SIVERS SEMICONDUCTORS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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