Correlation Between Lendlease and Transport International
Can any of the company-specific risk be diversified away by investing in both Lendlease and Transport International 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 Transport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Transport International Holdings, you can compare the effects of market volatilities on Lendlease and Transport International 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 Transport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Transport International.
Diversification Opportunities for Lendlease and Transport International
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lendlease and Transport is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of Lendlease i.e., Lendlease and Transport International go up and down completely randomly.
Pair Corralation between Lendlease and Transport International
Assuming the 90 days trading horizon Lendlease Group is expected to generate 1.47 times more return on investment than Transport International. However, Lendlease is 1.47 times more volatile than Transport International Holdings. It trades about 0.09 of its potential returns per unit of risk. Transport International Holdings is currently generating about -0.14 per unit of risk. If you would invest 374.00 in Lendlease Group on October 28, 2024 and sell it today you would earn a total of 7.00 from holding Lendlease Group or generate 1.87% 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. Transport International Holdin
Performance |
| Timeline |
| Lendlease Group |
| Transport International |
Lendlease and Transport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Transport International
The main advantage of trading using opposite Lendlease and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Transport International 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 Transport International will offset losses from the drop in Transport International's long position.| Lendlease vs. LANDSEA GREEN MANAGEMENT | Lendlease vs. APPLIED MATERIALS | Lendlease vs. The Yokohama Rubber | Lendlease vs. Perdoceo Education |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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