Correlation Between Lendlease and NetApp

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

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

Diversification Opportunities for Lendlease and NetApp

-0.04

Correlation Coefficient

Lendlease  NetApp

Good diversification

The 3 months correlation between Lendlease and NetApp is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Lendlease i.e., Lendlease and NetApp go up and down completely randomly.

Pair Corralation between Lendlease and NetApp

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the NetApp. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 1.07 times less risky than NetApp. The stock trades about -0.02 of its potential returns per unit of risk. The NetApp Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,851  in NetApp Inc on October 1, 2024 and sell it today you would earn a total of  5,317  from holding NetApp Inc or generate 90.87% return on investment over 90 days.

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

Lendlease Group  vs.  NetApp Inc

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NetApp Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NetApp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lendlease and NetApp

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

The idea behind Lendlease Group and NetApp Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.