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

DICKS Sporting  Lendlease

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

DICKS Sporting Goods

Risk-Adjusted Performance

Very Weak

Over the last 90 days DICKS Sporting Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Lendlease Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lendlease is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

The idea behind DICKS Sporting Goods and Lendlease 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.