Correlation Between Deutsche Bank and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank 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 Deutsche Bank and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Bank AG and Lloyds Banking Group, you can compare the effects of market volatilities on Deutsche Bank 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 Deutsche Bank with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Lloyds Banking.
Diversification Opportunities for Deutsche Bank and Lloyds Banking
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deutsche and Lloyds is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG 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 Deutsche Bank 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 Deutsche Bank AG 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 Deutsche Bank i.e., Deutsche Bank and Lloyds Banking go up and down completely randomly.
Pair Corralation between Deutsche Bank and Lloyds Banking
Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.85 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, Deutsche Bank AG is 2.52 times less risky than Lloyds Banking. It trades about 0.07 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Lloyds Banking Group on November 19, 2024 and sell it today you would earn a total of 24.00 from holding Lloyds Banking Group or generate 42.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 59.68% |
| Values | Daily Returns |
Deutsche Bank AG vs. Lloyds Banking Group
Performance |
| Timeline |
| Deutsche Bank AG |
| Lloyds Banking Group |
Deutsche Bank and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Lloyds Banking
The main advantage of trading using opposite Deutsche Bank and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank 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.| Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Banco Santander Brasil |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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