Correlation Between Magellan Financial and Lendlease
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Lendlease 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 Magellan Financial and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Financial Group and Lendlease Group, you can compare the effects of market volatilities on Magellan Financial and Lendlease 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 Magellan Financial with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Lendlease.
Diversification Opportunities for Magellan Financial and Lendlease
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magellan and Lendlease is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Magellan Financial 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 Magellan Financial Group are associated (or correlated) with Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of Magellan Financial i.e., Magellan Financial and Lendlease go up and down completely randomly.
Pair Corralation between Magellan Financial and Lendlease
Assuming the 90 days trading horizon Magellan Financial Group is expected to under-perform the Lendlease. In addition to that, Magellan Financial is 1.87 times more volatile than Lendlease Group. It trades about -0.06 of its total potential returns per unit of risk. Lendlease Group is currently generating about -0.06 per unit of volatility. If you would invest 676.00 in Lendlease Group on August 27, 2024 and sell it today you would lose (11.00) from holding Lendlease Group or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Lendlease Group
Performance |
| Timeline |
| Magellan Financial |
| Lendlease Group |
Magellan Financial and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Lendlease
The main advantage of trading using opposite Magellan Financial and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease's long position.| Magellan Financial vs. National Australia Bank | Magellan Financial vs. National Australia Bank | Magellan Financial vs. Westpac Banking | Magellan Financial vs. National Australia Bank |
| Lendlease vs. Scentre Group | Lendlease vs. Vicinity Centres Re | Lendlease vs. Charter Hall Retail | Lendlease vs. Cromwell Property 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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