Correlation Between Lendlease and Takeda Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Lendlease and Takeda Pharmaceutical 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 Takeda Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Takeda Pharmaceutical, you can compare the effects of market volatilities on Lendlease and Takeda Pharmaceutical 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 Takeda Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Takeda Pharmaceutical.
Diversification Opportunities for Lendlease and Takeda Pharmaceutical
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lendlease and Takeda is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of Lendlease i.e., Lendlease and Takeda Pharmaceutical go up and down completely randomly.
Pair Corralation between Lendlease and Takeda Pharmaceutical
Assuming the 90 days trading horizon Lendlease Group is expected to generate 1.65 times more return on investment than Takeda Pharmaceutical. However, Lendlease is 1.65 times more volatile than Takeda Pharmaceutical. It trades about 0.0 of its potential returns per unit of risk. Takeda Pharmaceutical is currently generating about -0.01 per unit of risk. If you would invest 435.00 in Lendlease Group on September 14, 2024 and sell it today you would lose (30.00) from holding Lendlease Group or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lendlease Group vs. Takeda Pharmaceutical
Performance |
| Timeline |
| Lendlease Group |
| Takeda Pharmaceutical |
Lendlease and Takeda Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Takeda Pharmaceutical
The main advantage of trading using opposite Lendlease and Takeda Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Takeda Pharmaceutical 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 Takeda Pharmaceutical will offset losses from the drop in Takeda Pharmaceutical's long position.The idea behind Lendlease Group and Takeda Pharmaceutical 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.| Takeda Pharmaceutical vs. Lendlease Group | Takeda Pharmaceutical vs. Fukuyama Transporting Co | Takeda Pharmaceutical vs. COLUMBIA SPORTSWEAR | Takeda Pharmaceutical vs. Pure Storage |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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