Correlation Between Sports Entertainment and Lendlease
Can any of the company-specific risk be diversified away by investing in both Sports Entertainment 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 Sports Entertainment and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Entertainment Group and Lendlease Group, you can compare the effects of market volatilities on Sports Entertainment 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 Sports Entertainment with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Entertainment and Lendlease.
Diversification Opportunities for Sports Entertainment and Lendlease
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sports and Lendlease is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sports Entertainment Group and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Sports Entertainment 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 Sports Entertainment 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 Sports Entertainment i.e., Sports Entertainment and Lendlease go up and down completely randomly.
Pair Corralation between Sports Entertainment and Lendlease
Assuming the 90 days trading horizon Sports Entertainment Group is expected to generate 2.69 times more return on investment than Lendlease. However, Sports Entertainment is 2.69 times more volatile than Lendlease Group. It trades about 0.02 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.02 per unit of risk. If you would invest 23.00 in Sports Entertainment Group on October 13, 2024 and sell it today you would lose (1.00) from holding Sports Entertainment Group or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sports Entertainment Group vs. Lendlease Group
Performance |
| Timeline |
| Sports Entertainment |
| Lendlease Group |
Sports Entertainment and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Entertainment and Lendlease
The main advantage of trading using opposite Sports Entertainment and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Entertainment 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.| Sports Entertainment vs. Step One Clothing | Sports Entertainment vs. Medical Developments International | Sports Entertainment vs. Aussie Broadband | Sports Entertainment vs. Carlton Investments |
| Lendlease vs. oOhMedia | Lendlease vs. Sports Entertainment Group | Lendlease vs. Aeon Metals | Lendlease vs. COAST ENTERTAINMENT HOLDINGS |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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