Correlation Between Adobe and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Adobe 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 Adobe and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adobe Inc and Lloyds Banking Group, you can compare the effects of market volatilities on Adobe 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 Adobe with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe and Lloyds Banking.
Diversification Opportunities for Adobe and Lloyds Banking
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adobe and Lloyds is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Inc 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 Adobe 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 Adobe Inc 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 Adobe i.e., Adobe and Lloyds Banking go up and down completely randomly.
Pair Corralation between Adobe and Lloyds Banking
Assuming the 90 days trading horizon Adobe is expected to generate 45.67 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, Adobe Inc is 1.17 times less risky than Lloyds Banking. It trades about 0.02 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.59 of returns per unit of risk over similar time horizon. If you would invest 1,749 in Lloyds Banking Group on December 4, 2024 and sell it today you would earn a total of 475.00 from holding Lloyds Banking Group or generate 27.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adobe Inc vs. Lloyds Banking Group
Performance |
| Timeline |
| Adobe Inc |
| Lloyds Banking Group |
Adobe and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adobe and Lloyds Banking
The main advantage of trading using opposite Adobe and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe 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.| Adobe vs. Check Point Software | Adobe vs. Microchip Technology Incorporated | Adobe vs. DXC Technology | Adobe vs. Charter Communications |
| Lloyds Banking vs. Apartment Investment and | Lloyds Banking vs. Ares Management | Lloyds Banking vs. JB Hunt Transport | Lloyds Banking vs. Telecomunicaes Brasileiras SA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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