Correlation Between Taylor Wimpey and Land Securities

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

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

Diversification Opportunities for Taylor Wimpey and Land Securities

0.13

Correlation Coefficient

Taylor Wimpey  Land Securities

Average diversification

The 3 months correlation between Taylor and Land is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Wimpey PLC and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group and Taylor Wimpey 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 Taylor Wimpey PLC are associated (or correlated) with Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of Taylor Wimpey i.e., Taylor Wimpey and Land Securities go up and down completely randomly.

Pair Corralation between Taylor Wimpey and Land Securities

Assuming the 90 days horizon Taylor Wimpey PLC is expected to under-perform the Land Securities. But the pink sheet apears to be less risky and, when comparing its historical volatility, Taylor Wimpey PLC is 1.1 times less risky than Land Securities. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Land Securities Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  704.00  in Land Securities Group on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Land Securities Group or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

Taylor Wimpey PLC  vs.  Land Securities Group

Taylor Wimpey PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taylor Wimpey PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Taylor Wimpey is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Land Securities Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Land Securities Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Land Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Taylor Wimpey and Land Securities

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

The idea behind Taylor Wimpey PLC and Land Securities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.