Correlation Between First Republic and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both First Republic 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 First Republic and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and Lloyds Banking Group, you can compare the effects of market volatilities on First Republic 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 First Republic with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Lloyds Banking.
Diversification Opportunities for First Republic and Lloyds Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Lloyds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank 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 First Republic 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 First Republic Bank 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 First Republic i.e., First Republic and Lloyds Banking go up and down completely randomly.
Pair Corralation between First Republic and Lloyds Banking
Assuming the 90 days trading horizon First Republic Bank is expected to under-perform the Lloyds Banking. In addition to that, First Republic is 1.89 times more volatile than Lloyds Banking Group. It trades about -0.06 of its total potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.06 per unit of volatility. If you would invest 4,022 in Lloyds Banking Group on November 27, 2024 and sell it today you would earn a total of 2,202 from holding Lloyds Banking Group or generate 54.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Republic Bank vs. Lloyds Banking Group
Performance |
| Timeline |
| First Republic Bank |
| Lloyds Banking Group |
First Republic and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Lloyds Banking
The main advantage of trading using opposite First Republic and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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.| First Republic vs. Air Transport Services | First Republic vs. Grupo Hotelero Santa | First Republic vs. CVS Health | First Republic vs. McEwen Mining |
| Lloyds Banking vs. Deutsche Bank Aktiengesellschaft | Lloyds Banking vs. Southern Copper | Lloyds Banking vs. Verizon Communications | Lloyds Banking vs. Steel Dynamics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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