Correlation Between Lendlease and GreenX Metals

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

By analyzing existing cross correlation between Lendlease Group and GreenX Metals, you can compare the effects of market volatilities on Lendlease and GreenX Metals 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and GreenX Metals.

Diversification Opportunities for Lendlease and GreenX Metals

0.05

Correlation Coefficient

Lendlease  GreenX Metals

Significant diversification

The 3 months correlation between Lendlease and GreenX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Lendlease i.e., Lendlease and GreenX Metals go up and down completely randomly.

Pair Corralation between Lendlease and GreenX Metals

Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.67 times more return on investment than GreenX Metals. However, Lendlease Group is 1.49 times less risky than GreenX Metals. It trades about -0.02 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.05 per unit of risk. If you would invest  702.00  in Lendlease Group on October 2, 2024 and sell it today you would lose (75.00) from holding Lendlease Group or give up 10.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lendlease Group  vs.  GreenX Metals

Lendlease Group

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GreenX Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GreenX Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lendlease and GreenX Metals

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

The idea behind Lendlease Group and GreenX Metals 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.