Correlation Between British Land and Land Securities

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

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

Diversification Opportunities for British Land and Land Securities

0.66

Correlation Coefficient

British Land  Land Securities

Poor diversification

The 3 months correlation between British and Land is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding British Land and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group and British Land 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 British Land are associated (or correlated) with Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of British Land i.e., British Land and Land Securities go up and down completely randomly.

Pair Corralation between British Land and Land Securities

Assuming the 90 days horizon British Land is expected to generate 0.89 times more return on investment than Land Securities. However, British Land is 1.13 times less risky than Land Securities. It trades about 0.06 of its potential returns per unit of risk. Land Securities Group is currently generating about 0.02 per unit of risk. If you would invest  445.00  in British Land on December 29, 2024 and sell it today you would earn a total of  21.00  from holding British Land or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

British Land  vs.  Land Securities Group

British Land

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in British Land are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, British Land is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Land Securities Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Land Securities Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Land Securities is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with British Land and Land Securities

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

The idea behind British Land and Land Securities 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.