Correlation Between Banco Santander and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Banco Santander and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Brasil and Lloyds Banking Group, you can compare the effects of market volatilities on Banco Santander 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 Banco Santander with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Lloyds Banking.
Diversification Opportunities for Banco Santander and Lloyds Banking
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Lloyds is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil 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 Banco Santander 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 Banco Santander Brasil 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 Banco Santander i.e., Banco Santander and Lloyds Banking go up and down completely randomly.
Pair Corralation between Banco Santander and Lloyds Banking
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Lloyds Banking. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.11 times less risky than Lloyds Banking. The stock trades about -0.21 of its potential returns per unit of risk. The Lloyds Banking Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Lloyds Banking Group on August 30, 2024 and sell it today you would lose (1.00) from holding Lloyds Banking Group or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Lloyds Banking Group
Performance |
| Timeline |
| Banco Santander Brasil |
| Lloyds Banking Group |
Banco Santander and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Lloyds Banking
The main advantage of trading using opposite Banco Santander and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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.| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
| Lloyds Banking vs. PT Bank Rakyat | Lloyds Banking vs. Barclays PLC | Lloyds Banking vs. Bank Mandiri Persero | Lloyds Banking vs. China Petroleum Chemical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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