Correlation Between Resource Base and Lendlease
Can any of the company-specific risk be diversified away by investing in both Resource Base 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 Resource Base and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource Base and Lendlease Group, you can compare the effects of market volatilities on Resource Base 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 Resource Base with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Base and Lendlease.
Diversification Opportunities for Resource Base and Lendlease
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Resource and Lendlease is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Resource Base and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Resource Base 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 Resource Base 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 Resource Base i.e., Resource Base and Lendlease go up and down completely randomly.
Pair Corralation between Resource Base and Lendlease
Assuming the 90 days trading horizon Resource Base is expected to under-perform the Lendlease. In addition to that, Resource Base is 2.88 times more volatile than Lendlease Group. It trades about -0.03 of its total potential returns per unit of risk. Lendlease Group is currently generating about 0.0 per unit of volatility. If you would invest 690.00 in Lendlease Group on November 28, 2024 and sell it today you would lose (81.00) from holding Lendlease Group or give up 11.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resource Base vs. Lendlease Group
Performance |
| Timeline |
| Resource Base |
| Lendlease Group |
Resource Base and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Base and Lendlease
The main advantage of trading using opposite Resource Base and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Base 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.| Resource Base vs. Diversified United Investment | Resource Base vs. Auctus Alternative Investments | Resource Base vs. MFF Capital Investments | Resource Base vs. Mirrabooka Investments |
| Lendlease vs. Navigator Global Investments | Lendlease vs. BKI Investment | Lendlease vs. Group 6 Metals | Lendlease vs. Polymetals Resources |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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