Correlation Between Lendlease and Snam SpA

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

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

Diversification Opportunities for Lendlease and Snam SpA

0.4

Correlation Coefficient

Lendlease  Snam SpA

Very weak diversification

The 3 months correlation between Lendlease and Snam is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Snam SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA 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 Snam SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam SpA has no effect on the direction of Lendlease i.e., Lendlease and Snam SpA go up and down completely randomly.

Pair Corralation between Lendlease and Snam SpA

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Snam SpA. In addition to that, Lendlease is 1.86 times more volatile than Snam SpA. It trades about -0.06 of its total potential returns per unit of risk. Snam SpA is currently generating about 0.01 per unit of volatility. If you would invest  438.00  in Snam SpA on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Snam SpA or generate 0.23% return on investment over 90 days.

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

Lendlease Group  vs.  Snam SpA

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 comparatively stable basic indicators, Lendlease is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Snam SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snam SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Snam SpA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lendlease and Snam SpA

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

The idea behind Lendlease Group and Snam SpA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.