Correlation Between BNP Paribas and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both BNP Paribas 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 BNP Paribas and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and Lloyds Banking Group, you can compare the effects of market volatilities on BNP Paribas 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 BNP Paribas with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Lloyds Banking.
Diversification Opportunities for BNP Paribas and Lloyds Banking
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BNP and Lloyds is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA 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 BNP Paribas 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 BNP Paribas SA 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 BNP Paribas i.e., BNP Paribas and Lloyds Banking go up and down completely randomly.
Pair Corralation between BNP Paribas and Lloyds Banking
Assuming the 90 days horizon BNP Paribas is expected to generate 6.94 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, BNP Paribas SA is 2.98 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Lloyds Banking Group on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Lloyds Banking Group or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.18% |
| Values | Daily Returns |
BNP Paribas SA vs. Lloyds Banking Group
Performance |
| Timeline |
| BNP Paribas SA |
| Lloyds Banking Group |
BNP Paribas and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Lloyds Banking
The main advantage of trading using opposite BNP Paribas and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas 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.| BNP Paribas vs. Societe Generale ADR | BNP Paribas vs. Intesa Sanpaolo SpA | BNP Paribas vs. Commerzbank AG PK | BNP Paribas vs. Swedbank AB |
| Lloyds Banking vs. Piraeus Bank SA | Lloyds Banking vs. Turkiye Garanti Bankasi | Lloyds Banking vs. Uwharrie Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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