Correlation Between Westpac Banking and Lendlease
Can any of the company-specific risk be diversified away by investing in both Westpac Banking 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 Westpac Banking and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Lendlease Group, you can compare the effects of market volatilities on Westpac Banking 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 Westpac Banking with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Lendlease.
Diversification Opportunities for Westpac Banking and Lendlease
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westpac and Lendlease is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Westpac Banking 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 Westpac Banking 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 Westpac Banking i.e., Westpac Banking and Lendlease go up and down completely randomly.
Pair Corralation between Westpac Banking and Lendlease
Assuming the 90 days trading horizon Westpac Banking is expected to generate 0.17 times more return on investment than Lendlease. However, Westpac Banking is 5.92 times less risky than Lendlease. It trades about 0.07 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.0 per unit of risk. If you would invest 9,460 in Westpac Banking on November 28, 2024 and sell it today you would earn a total of 955.00 from holding Westpac Banking or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Lendlease Group
Performance |
| Timeline |
| Westpac Banking |
| Lendlease Group |
Westpac Banking and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Lendlease
The main advantage of trading using opposite Westpac Banking and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking 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.| Westpac Banking vs. Australian Agricultural | Westpac Banking vs. Centaurus Metals | Westpac Banking vs. Polymetals Resources | Westpac Banking vs. MA Financial Group |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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