Correlation Between Lend Lease and Lend Lease

Can any of the company-specific risk be diversified away by investing in both Lend Lease and Lend Lease 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 Lend Lease and Lend Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lend Lease Group and Lend Lease Group, you can compare the effects of market volatilities on Lend Lease and Lend Lease 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 Lend Lease with a short position of Lend Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lend Lease and Lend Lease.

Diversification Opportunities for Lend Lease and Lend Lease

0.64

Correlation Coefficient

Lend Lease  Lend Lease

Poor diversification

The 3 months correlation between Lend and Lend is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lend Lease Group and Lend Lease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lend Lease Group and Lend Lease 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 Lend Lease Group are associated (or correlated) with Lend Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lend Lease Group has no effect on the direction of Lend Lease i.e., Lend Lease and Lend Lease go up and down completely randomly.

Pair Corralation between Lend Lease and Lend Lease

Assuming the 90 days horizon Lend Lease Group is expected to generate 3.69 times more return on investment than Lend Lease. However, Lend Lease is 3.69 times more volatile than Lend Lease Group. It trades about 0.02 of its potential returns per unit of risk. Lend Lease Group is currently generating about -0.01 per unit of risk. If you would invest  422.00  in Lend Lease Group on January 25, 2024 and sell it today you would lose (1.00) from holding Lend Lease Group or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lend Lease Group  vs.  Lend Lease Group

Lend Lease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lend Lease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lend Lease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lend Lease Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lend Lease and Lend Lease

The main advantage of trading using opposite Lend Lease and Lend Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lend Lease position performs unexpectedly, Lend Lease 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 Lend Lease will offset losses from the drop in Lend Lease's long position.

The idea behind Lend Lease Group and Lend Lease Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.