Correlation Between Workspace Group and LSL Property
Can any of the company-specific risk be diversified away by investing in both Workspace Group and LSL Property 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 Workspace Group and LSL Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workspace Group PLC and LSL Property Services, you can compare the effects of market volatilities on Workspace Group and LSL Property 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 Workspace Group with a short position of LSL Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workspace Group and LSL Property.
Diversification Opportunities for Workspace Group and LSL Property
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Workspace and LSL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Workspace Group PLC and LSL Property Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSL Property Services and Workspace Group 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 Workspace Group PLC are associated (or correlated) with LSL Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSL Property Services has no effect on the direction of Workspace Group i.e., Workspace Group and LSL Property go up and down completely randomly.
Pair Corralation between Workspace Group and LSL Property
Assuming the 90 days trading horizon Workspace Group PLC is expected to under-perform the LSL Property. In addition to that, Workspace Group is 1.23 times more volatile than LSL Property Services. It trades about -0.18 of its total potential returns per unit of risk. LSL Property Services is currently generating about -0.2 per unit of volatility. If you would invest 29,700 in LSL Property Services on August 30, 2024 and sell it today you would lose (3,500) from holding LSL Property Services or give up 11.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workspace Group PLC vs. LSL Property Services
Performance |
| Timeline |
| Workspace Group PLC |
| LSL Property Services |
Workspace Group and LSL Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workspace Group and LSL Property
The main advantage of trading using opposite Workspace Group and LSL Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workspace Group position performs unexpectedly, LSL Property 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 LSL Property will offset losses from the drop in LSL Property's long position.| Workspace Group vs. Derwent London PLC | Workspace Group vs. Hammerson PLC | Workspace Group vs. Supermarket Income REIT | Workspace Group vs. Cairo Communication SpA |
| LSL Property vs. Aeorema Communications Plc | LSL Property vs. Take Two Interactive Software | LSL Property vs. Verizon Communications | LSL Property vs. Sunny Optical Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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