Correlation Between DICKS Sporting and Lendlease
Can any of the company-specific risk be diversified away by investing in both DICKS Sporting 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 DICKS Sporting and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DICKS Sporting Goods and Lendlease Group, you can compare the effects of market volatilities on DICKS Sporting 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 DICKS Sporting with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKS Sporting and Lendlease.
Diversification Opportunities for DICKS Sporting and Lendlease
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DICKS and Lendlease is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and DICKS Sporting 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 DICKS Sporting Goods 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 DICKS Sporting i.e., DICKS Sporting and Lendlease go up and down completely randomly.
Pair Corralation between DICKS Sporting and Lendlease
Assuming the 90 days horizon DICKS Sporting Goods is expected to under-perform the Lendlease. In addition to that, DICKS Sporting is 1.7 times more volatile than Lendlease Group. It trades about -0.07 of its total potential returns per unit of risk. Lendlease Group is currently generating about -0.03 per unit of volatility. If you would invest 367.00 in Lendlease Group on December 30, 2024 and sell it today you would lose (14.00) from holding Lendlease Group or give up 3.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
DICKS Sporting Goods vs. Lendlease Group
Performance |
Timeline |
DICKS Sporting Goods |
Lendlease Group |
DICKS Sporting and Lendlease Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DICKS Sporting and Lendlease
The main advantage of trading using opposite DICKS Sporting and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting 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.DICKS Sporting vs. Tradeweb Markets | DICKS Sporting vs. AUTO TRADER ADR | DICKS Sporting vs. PKSHA TECHNOLOGY INC | DICKS Sporting vs. Upland Software |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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