Correlation Between General Dynamics and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both General Dynamics 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 General Dynamics and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Lloyds Banking Group, you can compare the effects of market volatilities on General Dynamics 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 General Dynamics with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Lloyds Banking.
Diversification Opportunities for General Dynamics and Lloyds Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between General and Lloyds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics 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 General Dynamics 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 General Dynamics 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 General Dynamics i.e., General Dynamics and Lloyds Banking go up and down completely randomly.
Pair Corralation between General Dynamics and Lloyds Banking
Assuming the 90 days horizon General Dynamics is expected to generate 1.07 times more return on investment than Lloyds Banking. However, General Dynamics is 1.07 times more volatile than Lloyds Banking Group. It trades about 0.13 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.11 per unit of risk. If you would invest 451,616 in General Dynamics on September 3, 2024 and sell it today you would earn a total of 124,884 from holding General Dynamics or generate 27.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
General Dynamics vs. Lloyds Banking Group
Performance |
| Timeline |
| General Dynamics |
| Lloyds Banking Group |
General Dynamics and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Lloyds Banking
The main advantage of trading using opposite General Dynamics and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics 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.| General Dynamics vs. Prudential Financial | General Dynamics vs. Grupo Sports World | General Dynamics vs. Verizon Communications | General Dynamics vs. DXC Technology |
| Lloyds Banking vs. Apple Inc | Lloyds Banking vs. Microsoft | Lloyds Banking vs. Alphabet Inc Class A | Lloyds Banking vs. Alphabet Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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