Correlation Between BG Foods and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both BG Foods 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 BG Foods and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and Lloyds Banking Group, you can compare the effects of market volatilities on BG Foods 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 BG Foods with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Lloyds Banking.
Diversification Opportunities for BG Foods and Lloyds Banking
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DHR and Lloyds is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods 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 BG Foods 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 BG Foods 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 BG Foods i.e., BG Foods and Lloyds Banking go up and down completely randomly.
Pair Corralation between BG Foods and Lloyds Banking
Assuming the 90 days trading horizon BG Foods is expected to under-perform the Lloyds Banking. In addition to that, BG Foods is 1.4 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 0.03 per unit of volatility. If you would invest 195.00 in Lloyds Banking Group on October 16, 2024 and sell it today you would earn a total of 49.00 from holding Lloyds Banking Group or generate 25.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BG Foods vs. Lloyds Banking Group
Performance |
| Timeline |
| BG Foods |
| Lloyds Banking Group |
BG Foods and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BG Foods and Lloyds Banking
The main advantage of trading using opposite BG Foods and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods 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.| BG Foods vs. BJs Wholesale Club | BG Foods vs. SPARTAN STORES | BG Foods vs. Japan Tobacco | BG Foods vs. Scandinavian Tobacco Group |
| Lloyds Banking vs. United Natural Foods | Lloyds Banking vs. APPLIED MATERIALS | Lloyds Banking vs. SANOK RUBBER ZY | Lloyds Banking vs. BG Foods |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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