Correlation Between Fevertree Drinks and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Lloyds Banking Group, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Lloyds Banking.
Diversification Opportunities for Fevertree Drinks and Lloyds Banking
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fevertree and Lloyds is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc 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 Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Lloyds Banking go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Lloyds Banking
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Lloyds Banking. In addition to that, Fevertree Drinks is 4.97 times more volatile than Lloyds Banking Group. It trades about -0.03 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.07 per unit of volatility. If you would invest 12,205 in Lloyds Banking Group on September 26, 2024 and sell it today you would earn a total of 2,070 from holding Lloyds Banking Group or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Lloyds Banking Group
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Lloyds Banking Group |
Fevertree Drinks and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Lloyds Banking
The main advantage of trading using opposite Fevertree Drinks and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Hyundai Motor | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Chocoladefabriken Lindt Spruengli |
| Lloyds Banking vs. Toyota Motor Corp | Lloyds Banking vs. SoftBank Group Corp | Lloyds Banking vs. OTP Bank Nyrt | Lloyds Banking vs. Freeport McMoRan |
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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