Correlation Between Lendlease and United States

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Can any of the company-specific risk be diversified away by investing in both Lendlease and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and United States Steel, you can compare the effects of market volatilities on Lendlease and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and United States.

Diversification Opportunities for Lendlease and United States

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Lendlease and United is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Lendlease i.e., Lendlease and United States go up and down completely randomly.

Pair Corralation between Lendlease and United States

Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.39 times more return on investment than United States. However, Lendlease Group is 2.53 times less risky than United States. It trades about -0.26 of its potential returns per unit of risk. United States Steel is currently generating about -0.19 per unit of risk. If you would invest  412.00  in Lendlease Group on October 10, 2024 and sell it today you would lose (34.00) from holding Lendlease Group or give up 8.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.44%
ValuesDaily Returns

Lendlease Group  vs.  United States Steel

 Performance 
       Timeline  
Lendlease Group 

Risk-Adjusted Performance

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Weak
 
Strong
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 unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
United States Steel 

Risk-Adjusted Performance

0 of 100

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

Lendlease and United States Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lendlease and United States

The main advantage of trading using opposite Lendlease and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.
The idea behind Lendlease Group and United States Steel 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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