Correlation Between Caledonia Mining and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Lloyds Banking Group, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Lloyds Banking.
Diversification Opportunities for Caledonia Mining and Lloyds Banking
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caledonia and Lloyds is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Lloyds Banking go up and down completely randomly.
Pair Corralation between Caledonia Mining and Lloyds Banking
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 6.51 times less return on investment than Lloyds Banking. In addition to that, Caledonia Mining is 2.79 times more volatile than Lloyds Banking Group. It trades about 0.02 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.34 per unit of volatility. If you would invest 14,450 in Lloyds Banking Group on December 14, 2024 and sell it today you would earn a total of 375.00 from holding Lloyds Banking Group or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Lloyds Banking Group
Performance |
| Timeline |
| Caledonia Mining |
| Lloyds Banking Group |
Caledonia Mining and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Lloyds Banking
The main advantage of trading using opposite Caledonia Mining and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.| Caledonia Mining vs. Broadridge Financial Solutions | ||
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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