Correlation Between STEEL DYNAMICS and Lendlease

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

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

Diversification Opportunities for STEEL DYNAMICS and Lendlease

0.69

Correlation Coefficient

STEEL DYNAMICS  Lendlease

Poor diversification

The 3 months correlation between STEEL and Lendlease is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and STEEL DYNAMICS 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 STEEL DYNAMICS 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 STEEL DYNAMICS i.e., STEEL DYNAMICS and Lendlease go up and down completely randomly.

Pair Corralation between STEEL DYNAMICS and Lendlease

Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 1.3 times more return on investment than Lendlease. However, STEEL DYNAMICS is 1.3 times more volatile than Lendlease Group. It trades about -0.06 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.16 per unit of risk. If you would invest  12,653  in STEEL DYNAMICS on December 11, 2024 and sell it today you would lose (991.00) from holding STEEL DYNAMICS or give up 7.83% of portfolio value over 90 days.

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

STEEL DYNAMICS  vs.  Lendlease Group

STEEL DYNAMICS

Risk-Adjusted Performance

Very Weak

Over the last 90 days STEEL DYNAMICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Lendlease Group

Risk-Adjusted Performance

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

Pair Trading with STEEL DYNAMICS and Lendlease

The main advantage of trading using opposite STEEL DYNAMICS and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS 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 STEEL DYNAMICS 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.