Correlation Between Mount Gibson and Lendlease
Can any of the company-specific risk be diversified away by investing in both Mount Gibson 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 Mount Gibson and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Lendlease Group, you can compare the effects of market volatilities on Mount Gibson 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 Mount Gibson with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Lendlease.
Diversification Opportunities for Mount Gibson and Lendlease
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mount and Lendlease is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Lendlease go up and down completely randomly.
Pair Corralation between Mount Gibson and Lendlease
Assuming the 90 days trading horizon Mount Gibson Iron is expected to under-perform the Lendlease. In addition to that, Mount Gibson is 1.65 times more volatile than Lendlease Group. It trades about -0.02 of its total potential returns per unit of risk. Lendlease Group is currently generating about 0.01 per unit of volatility. If you would invest 700.00 in Lendlease Group on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Lendlease Group or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. Lendlease Group
Performance |
| Timeline |
| Mount Gibson Iron |
| Lendlease Group |
Mount Gibson and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Lendlease
The main advantage of trading using opposite Mount Gibson and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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.| Mount Gibson vs. Northern Star Resources | Mount Gibson vs. Evolution Mining | Mount Gibson vs. Bluescope Steel | Mount Gibson vs. Sandfire Resources NL |
| Lendlease vs. Australian United Investment | Lendlease vs. Clime Investment Management | Lendlease vs. Mirrabooka Investments | Lendlease vs. Sandon Capital Investments |
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 CEOs Directory module to screen CEOs from public companies around the world.
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