Correlation Between Lendlease and Brickworks
Can any of the company-specific risk be diversified away by investing in both Lendlease and Brickworks 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 Lendlease and Brickworks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Brickworks, you can compare the effects of market volatilities on Lendlease and Brickworks 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 Lendlease with a short position of Brickworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Brickworks.
Diversification Opportunities for Lendlease and Brickworks
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lendlease and Brickworks is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Brickworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickworks and Lendlease 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 Lendlease Group are associated (or correlated) with Brickworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickworks has no effect on the direction of Lendlease i.e., Lendlease and Brickworks go up and down completely randomly.
Pair Corralation between Lendlease and Brickworks
Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Brickworks. In addition to that, Lendlease is 1.47 times more volatile than Brickworks. It trades about -0.01 of its total potential returns per unit of risk. Brickworks is currently generating about 0.04 per unit of volatility. If you would invest 2,073 in Brickworks on September 24, 2024 and sell it today you would earn a total of 507.00 from holding Brickworks or generate 24.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Lendlease Group vs. Brickworks
Performance |
Timeline |
Lendlease Group |
Brickworks |
Lendlease and Brickworks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lendlease and Brickworks
The main advantage of trading using opposite Lendlease and Brickworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Brickworks 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 Brickworks will offset losses from the drop in Brickworks' long position.Lendlease vs. Aeon Metals | Lendlease vs. Perpetual Credit Income | Lendlease vs. GreenX Metals | Lendlease vs. Insignia Financial |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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