Correlation Between Liberty Media and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Lloyds Banking 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 Liberty Media and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media Corp and Lloyds Banking Group, you can compare the effects of market volatilities on Liberty Media and Lloyds Banking 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 Liberty Media with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Lloyds Banking.
Diversification Opportunities for Liberty Media and Lloyds Banking
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and Lloyds is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group and Liberty Media 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 Liberty Media Corp are associated (or correlated) with Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of Liberty Media i.e., Liberty Media and Lloyds Banking go up and down completely randomly.
Pair Corralation between Liberty Media and Lloyds Banking
Assuming the 90 days trading horizon Liberty Media Corp is expected to generate 1.54 times more return on investment than Lloyds Banking. However, Liberty Media is 1.54 times more volatile than Lloyds Banking Group. It trades about 0.05 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.04 per unit of risk. If you would invest 5,604 in Liberty Media Corp on September 3, 2024 and sell it today you would earn a total of 2,542 from holding Liberty Media Corp or generate 45.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.56% |
| Values | Daily Returns |
Liberty Media Corp vs. Lloyds Banking Group
Performance |
| Timeline |
| Liberty Media Corp |
| Lloyds Banking Group |
Liberty Media and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Lloyds Banking
The main advantage of trading using opposite Liberty Media and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.| Liberty Media vs. The Mercantile Investment | Liberty Media vs. Power Metal Resources | Liberty Media vs. Capital Metals PLC | Liberty Media vs. European Metals Holdings |
| Lloyds Banking vs. Alior Bank SA | Lloyds Banking vs. AcadeMedia AB | Lloyds Banking vs. Intermediate Capital Group | Lloyds Banking vs. Liberty Media Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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