Correlation Between BBVA Banco and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both BBVA Banco 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 BBVA Banco and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and Lloyds Banking Group, you can compare the effects of market volatilities on BBVA Banco 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 BBVA Banco with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Lloyds Banking.
Diversification Opportunities for BBVA Banco and Lloyds Banking
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BBVA and Lloyds is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances 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 BBVA Banco 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 BBVA Banco Frances 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 BBVA Banco i.e., BBVA Banco and Lloyds Banking go up and down completely randomly.
Pair Corralation between BBVA Banco and Lloyds Banking
Given the investment horizon of 90 days BBVA Banco is expected to generate 2.29 times less return on investment than Lloyds Banking. In addition to that, BBVA Banco is 1.72 times more volatile than Lloyds Banking Group. It trades about 0.07 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.26 per unit of volatility. If you would invest 270.00 in Lloyds Banking Group on November 3, 2024 and sell it today you would earn a total of 35.00 from holding Lloyds Banking Group or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BBVA Banco Frances vs. Lloyds Banking Group
Performance |
| Timeline |
| BBVA Banco Frances |
| Lloyds Banking Group |
BBVA Banco and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Lloyds Banking
The main advantage of trading using opposite BBVA Banco and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco 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.| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
| Lloyds Banking vs. Itau Unibanco Banco | Lloyds Banking vs. Grupo Financiero Galicia | Lloyds Banking vs. Banco Macro SA | Lloyds Banking vs. Banco Santander Brasil |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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