Correlation Between Lendlease and ITV Plc
Can any of the company-specific risk be diversified away by investing in both Lendlease and ITV Plc 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 ITV Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and ITV plc, you can compare the effects of market volatilities on Lendlease and ITV Plc 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 ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and ITV Plc.
Diversification Opportunities for Lendlease and ITV Plc
Good diversification
The 3 months correlation between Lendlease and ITV is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc 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 ITV Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV plc has no effect on the direction of Lendlease i.e., Lendlease and ITV Plc go up and down completely randomly.
Pair Corralation between Lendlease and ITV Plc
Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.77 times more return on investment than ITV Plc. However, Lendlease Group is 1.3 times less risky than ITV Plc. It trades about 0.12 of its potential returns per unit of risk. ITV plc is currently generating about -0.02 per unit of risk. If you would invest 371.00 in Lendlease Group on November 3, 2024 and sell it today you would earn a total of 15.00 from holding Lendlease Group or generate 4.04% 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. ITV plc
Performance |
| Timeline |
| Lendlease Group |
| ITV plc |
Lendlease and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and ITV Plc
The main advantage of trading using opposite Lendlease and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, ITV Plc 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 ITV Plc will offset losses from the drop in ITV Plc's long position.| Lendlease vs. Monster Beverage Corp | Lendlease vs. Tsingtao Brewery | Lendlease vs. National Beverage Corp | Lendlease vs. EVS Broadcast Equipment |
| ITV Plc vs. VIVENDI UNSPONARD EO | ITV Plc vs. News Corporation | ITV Plc vs. RTL Group SA | ITV Plc vs. Nexstar Media 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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