Correlation Between NetApp and Lendlease

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

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

Diversification Opportunities for NetApp and Lendlease

-0.21

Correlation Coefficient

NetApp  Lendlease

Very good diversification

The 3 months correlation between NetApp and Lendlease is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and NetApp 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 NetApp Inc are associated (or correlated) with Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of NetApp i.e., NetApp and Lendlease go up and down completely randomly.

Pair Corralation between NetApp and Lendlease

Assuming the 90 days horizon NetApp Inc is expected to generate 1.49 times more return on investment than Lendlease. However, NetApp is 1.49 times more volatile than Lendlease Group. It trades about 0.03 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.24 per unit of risk. If you would invest  11,390  in NetApp Inc on September 21, 2024 and sell it today you would earn a total of  110.00  from holding NetApp Inc or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

NetApp Inc  vs.  Lendlease Group

NetApp Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NetApp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with NetApp and Lendlease

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

The idea behind NetApp Inc and Lendlease Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.