Correlation Between Lendlease and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Lendlease and Micron Technology 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 Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Micron Technology, you can compare the effects of market volatilities on Lendlease and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Micron Technology.
Diversification Opportunities for Lendlease and Micron Technology
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lendlease and Micron is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Lendlease i.e., Lendlease and Micron Technology go up and down completely randomly.
Pair Corralation between Lendlease and Micron Technology
Assuming the 90 days trading horizon Lendlease is expected to generate 1.36 times less return on investment than Micron Technology. But when comparing it to its historical volatility, Lendlease Group is 2.91 times less risky than Micron Technology. It trades about 0.12 of its potential returns per unit of risk. Micron Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,505 in Micron Technology on November 3, 2024 and sell it today you would earn a total of 315.00 from holding Micron Technology or generate 3.7% 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. Micron Technology
Performance |
Timeline |
Lendlease Group |
Micron Technology |
Lendlease and Micron Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lendlease and Micron Technology
The main advantage of trading using opposite Lendlease and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.Lendlease vs. Monster Beverage Corp | Lendlease vs. Tsingtao Brewery | Lendlease vs. National Beverage Corp | Lendlease vs. EVS Broadcast Equipment |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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