Correlation Between Federal Home and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Federal Home 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 Federal Home and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home Loan and Lloyds Banking Group, you can compare the effects of market volatilities on Federal Home 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 Federal Home with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Lloyds Banking.
Diversification Opportunities for Federal Home and Lloyds Banking
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Lloyds is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan 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 Federal Home 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 Federal Home Loan 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 Federal Home i.e., Federal Home and Lloyds Banking go up and down completely randomly.
Pair Corralation between Federal Home and Lloyds Banking
Assuming the 90 days horizon Federal Home Loan is expected to generate 2.35 times more return on investment than Lloyds Banking. However, Federal Home is 2.35 times more volatile than Lloyds Banking Group. It trades about 0.39 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.1 per unit of risk. If you would invest 131.00 in Federal Home Loan on August 25, 2024 and sell it today you would earn a total of 151.00 from holding Federal Home Loan or generate 115.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. Lloyds Banking Group
Performance |
| Timeline |
| Federal Home Loan |
| Lloyds Banking Group |
Federal Home and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Lloyds Banking
The main advantage of trading using opposite Federal Home and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home 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.| Federal Home vs. Superior Plus Corp | Federal Home vs. NMI Holdings | Federal Home vs. Origin Agritech | Federal Home vs. SIVERS SEMICONDUCTORS AB |
| Lloyds Banking vs. HYATT HOTELS A | Lloyds Banking vs. Park Hotels Resorts | Lloyds Banking vs. MELIA HOTELS | Lloyds Banking vs. Fidelity National Information |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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