Correlation Between Vicinity Centres and Lendlease
Can any of the company-specific risk be diversified away by investing in both Vicinity Centres 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 Vicinity Centres and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vicinity Centres Re and Lendlease Group, you can compare the effects of market volatilities on Vicinity Centres 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 Vicinity Centres with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity Centres and Lendlease.
Diversification Opportunities for Vicinity Centres and Lendlease
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vicinity and Lendlease is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres Re and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Vicinity Centres 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 Vicinity Centres Re 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 Vicinity Centres i.e., Vicinity Centres and Lendlease go up and down completely randomly.
Pair Corralation between Vicinity Centres and Lendlease
Assuming the 90 days trading horizon Vicinity Centres is expected to generate 5.11 times less return on investment than Lendlease. But when comparing it to its historical volatility, Vicinity Centres Re is 1.36 times less risky than Lendlease. It trades about 0.04 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 676.00 in Lendlease Group on August 30, 2024 and sell it today you would earn a total of 35.00 from holding Lendlease Group or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vicinity Centres Re vs. Lendlease Group
Performance |
| Timeline |
| Vicinity Centres |
| Lendlease Group |
Vicinity Centres and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicinity Centres and Lendlease
The main advantage of trading using opposite Vicinity Centres and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity Centres 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.| Vicinity Centres vs. Scentre Group | Vicinity Centres vs. Charter Hall Retail | Vicinity Centres vs. Cromwell Property Group | Vicinity Centres vs. Carindale Property Trust |
| Lendlease vs. Kingsrose Mining | Lendlease vs. Flagship Investments | Lendlease vs. Medical Developments International | Lendlease vs. Nova Eye Medical |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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