Correlation Between Metro Mining and Lendlease

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

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

Diversification Opportunities for Metro Mining and Lendlease

-0.25

Correlation Coefficient

Metro Mining  Lendlease

Very good diversification

The 3 months correlation between Metro and Lendlease is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Metro Mining 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 Metro Mining 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 Metro Mining i.e., Metro Mining and Lendlease go up and down completely randomly.

Pair Corralation between Metro Mining and Lendlease

Assuming the 90 days trading horizon Metro Mining is expected to generate 2.08 times more return on investment than Lendlease. However, Metro Mining is 2.08 times more volatile than Lendlease Group. It trades about 0.15 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.11 per unit of risk. If you would invest  4.20  in Metro Mining on September 24, 2024 and sell it today you would earn a total of  1.30  from holding Metro Mining or generate 30.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Metro Mining  vs.  Lendlease Group

Metro Mining

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Metro Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Metro Mining and Lendlease

The main advantage of trading using opposite Metro Mining and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining 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 Metro Mining 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.