Correlation Between Alphabet and Lend Lease

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

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

Diversification Opportunities for Alphabet and Lend Lease

-0.4

Correlation Coefficient

Alphabet  Lend Lease

Very good diversification

The 3 months correlation between Alphabet and Lend is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A 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 Alphabet 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 Alphabet Inc Class A 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 Alphabet i.e., Alphabet and Lend Lease go up and down completely randomly.

Pair Corralation between Alphabet and Lend Lease

Assuming the 90 days horizon Alphabet Inc Class A is expected to under-perform the Lend Lease. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class A is 1.64 times less risky than Lend Lease. The stock trades about -0.12 of its potential returns per unit of risk. The Lend Lease Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  356.00  in Lend Lease Group on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Lend Lease Group or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Alphabet Inc Class A  vs.  Lend Lease Group

Alphabet Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lend Lease Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lend Lease Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lend Lease may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alphabet and Lend Lease

The main advantage of trading using opposite Alphabet and Lend Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class A 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.