Correlation Between GFL ENVIRONM and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM 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 GFL ENVIRONM and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Lloyds Banking Group, you can compare the effects of market volatilities on GFL ENVIRONM 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 GFL ENVIRONM with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Lloyds Banking.
Diversification Opportunities for GFL ENVIRONM and Lloyds Banking
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GFL and Lloyds is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM i.e., GFL ENVIRONM and Lloyds Banking go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Lloyds Banking
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 0.9 times more return on investment than Lloyds Banking. However, GFL ENVIRONM is 1.11 times less risky than Lloyds Banking. 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 3,451 in GFL ENVIRONM on September 4, 2024 and sell it today you would earn a total of 1,069 from holding GFL ENVIRONM or generate 30.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. Lloyds Banking Group
Performance |
| Timeline |
| GFL ENVIRONM |
| Lloyds Banking Group |
GFL ENVIRONM and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Lloyds Banking
The main advantage of trading using opposite GFL ENVIRONM and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM 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.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Republic Services | GFL ENVIRONM vs. Waste Connections | GFL ENVIRONM vs. Veolia Environnement SA |
| Lloyds Banking vs. Eidesvik Offshore ASA | Lloyds Banking vs. BW OFFSHORE LTD | Lloyds Banking vs. SEKISUI CHEMICAL | Lloyds Banking vs. SOLSTAD OFFSHORE NK |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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