Correlation Between Freeport McMoRan and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan 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 Freeport McMoRan and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Lloyds Banking Group, you can compare the effects of market volatilities on Freeport McMoRan 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 Freeport McMoRan with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Lloyds Banking.
Diversification Opportunities for Freeport McMoRan and Lloyds Banking
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Freeport and Lloyds is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan i.e., Freeport McMoRan and Lloyds Banking go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Lloyds Banking
Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 4.24 times less return on investment than Lloyds Banking. In addition to that, Freeport McMoRan is 4.96 times more volatile than Lloyds Banking Group. It trades about 0.0 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.05 per unit of volatility. If you would invest 12,484 in Lloyds Banking Group on October 15, 2024 and sell it today you would earn a total of 1,466 from holding Lloyds Banking Group or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. Lloyds Banking Group
Performance |
| Timeline |
| Freeport McMoRan |
| Lloyds Banking Group |
Freeport McMoRan and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Lloyds Banking
The main advantage of trading using opposite Freeport McMoRan and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan 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.| Freeport McMoRan vs. Gamma Communications PLC | Freeport McMoRan vs. Cairo Communication SpA | Freeport McMoRan vs. Charter Communications Cl | Freeport McMoRan vs. Zegona Communications Plc |
| Lloyds Banking vs. Norwegian Air Shuttle | Lloyds Banking vs. Pentair PLC | Lloyds Banking vs. AMG Advanced Metallurgical | Lloyds Banking vs. BW Offshore |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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