Correlation Between BORR DRILLING and Lendlease

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

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

Diversification Opportunities for BORR DRILLING and Lendlease

0.42

Correlation Coefficient

BORR DRILLING  Lendlease

Very weak diversification

The 3 months correlation between BORR and Lendlease is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and BORR DRILLING 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 BORR DRILLING NEW 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 BORR DRILLING i.e., BORR DRILLING and Lendlease go up and down completely randomly.

Pair Corralation between BORR DRILLING and Lendlease

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the Lendlease. In addition to that, BORR DRILLING is 2.84 times more volatile than Lendlease Group. It trades about -0.05 of its total potential returns per unit of risk. Lendlease Group is currently generating about 0.21 per unit of volatility. If you would invest  405.00  in Lendlease Group on September 1, 2024 and sell it today you would earn a total of  27.00  from holding Lendlease Group or generate 6.67% return on investment over 90 days.

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

BORR DRILLING NEW  vs.  Lendlease Group

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lendlease Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lendlease Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lendlease may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BORR DRILLING and Lendlease

The main advantage of trading using opposite BORR DRILLING and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BORR DRILLING 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 BORR DRILLING NEW 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.