Correlation Between Stratus Properties and Lend Lease

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

Diversification Opportunities for Stratus Properties and Lend Lease

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Stratus and Lend is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stratus Properties and Lend Lease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lend Lease Group and Stratus Properties 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 Stratus Properties are associated (or correlated) with Lend Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lend Lease Group has no effect on the direction of Stratus Properties i.e., Stratus Properties and Lend Lease go up and down completely randomly.

Pair Corralation between Stratus Properties and Lend Lease

Given the investment horizon of 90 days Stratus Properties is expected to under-perform the Lend Lease. In addition to that, Stratus Properties is 1.07 times more volatile than Lend Lease Group. It trades about 0.0 of its total potential returns per unit of risk. Lend Lease Group is currently generating about 0.02 per unit of volatility. If you would invest  406.00  in Lend Lease Group on October 25, 2024 and sell it today you would lose (5.00) from holding Lend Lease Group or give up 1.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Stratus Properties  vs.  Lend Lease Group

 Performance 
       Timeline  
Stratus Properties 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Stratus Properties 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.
Lend Lease Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lend Lease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Stratus Properties and Lend Lease Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stratus Properties and Lend Lease

The main advantage of trading using opposite Stratus Properties and Lend Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stratus Properties position performs unexpectedly, Lend Lease 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 Lend Lease will offset losses from the drop in Lend Lease's long position.
The idea behind Stratus Properties and Lend Lease 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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