Correlation Between Lendlease and Weyerhaeuser
Can any of the company-specific risk be diversified away by investing in both Lendlease and Weyerhaeuser 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 Weyerhaeuser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Weyerhaeuser, you can compare the effects of market volatilities on Lendlease and Weyerhaeuser 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 Weyerhaeuser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Weyerhaeuser.
Diversification Opportunities for Lendlease and Weyerhaeuser
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lendlease and Weyerhaeuser is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser 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 Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of Lendlease i.e., Lendlease and Weyerhaeuser go up and down completely randomly.
Pair Corralation between Lendlease and Weyerhaeuser
Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Weyerhaeuser. In addition to that, Lendlease is 1.47 times more volatile than Weyerhaeuser. It trades about -0.01 of its total potential returns per unit of risk. Weyerhaeuser is currently generating about 0.02 per unit of volatility. If you would invest 2,461 in Weyerhaeuser on December 12, 2024 and sell it today you would earn a total of 305.00 from holding Weyerhaeuser or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Weyerhaeuser
Performance |
| Timeline |
| Lendlease Group |
| Weyerhaeuser |
Lendlease and Weyerhaeuser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Weyerhaeuser
The main advantage of trading using opposite Lendlease and Weyerhaeuser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Weyerhaeuser 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 Weyerhaeuser will offset losses from the drop in Weyerhaeuser's long position.| Lendlease vs. TOREX SEMICONDUCTOR LTD | ||
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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