Correlation Between Lendlease and Alcoa
Can any of the company-specific risk be diversified away by investing in both Lendlease and Alcoa 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 Lendlease and Alcoa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Alcoa, you can compare the effects of market volatilities on Lendlease and Alcoa 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 Lendlease with a short position of Alcoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Alcoa.
Diversification Opportunities for Lendlease and Alcoa
Good diversification
The 3 months correlation between Lendlease and Alcoa is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Alcoa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa and Lendlease 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 Lendlease Group are associated (or correlated) with Alcoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa has no effect on the direction of Lendlease i.e., Lendlease and Alcoa go up and down completely randomly.
Pair Corralation between Lendlease and Alcoa
Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Alcoa. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 2.44 times less risky than Alcoa. The stock trades about -0.08 of its potential returns per unit of risk. The Alcoa is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,837 in Alcoa on September 6, 2025 and sell it today you would earn a total of 1,724 from holding Alcoa or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Alcoa
Performance |
| Timeline |
| Lendlease Group |
| Alcoa |
Lendlease and Alcoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Alcoa
The main advantage of trading using opposite Lendlease and Alcoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Alcoa 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 Alcoa will offset losses from the drop in Alcoa's long position.| Lendlease vs. Scentre Group | Lendlease vs. Vicinity Centres | Lendlease vs. Charter Hall Retail | Lendlease vs. Cromwell Property Group |
| Alcoa vs. Southern Cross Media | Alcoa vs. SKY Metals | Alcoa vs. Sports Entertainment Group | Alcoa vs. Coast Entertainment Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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