Correlation Between Intesa Sanpaolo and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Intesa Sanpaolo 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 Intesa Sanpaolo and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intesa Sanpaolo SpA and Lloyds Banking Group, you can compare the effects of market volatilities on Intesa Sanpaolo 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 Intesa Sanpaolo with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intesa Sanpaolo and Lloyds Banking.
Diversification Opportunities for Intesa Sanpaolo and Lloyds Banking
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intesa and Lloyds is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Intesa Sanpaolo SpA 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 Intesa Sanpaolo 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 Intesa Sanpaolo SpA 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 Intesa Sanpaolo i.e., Intesa Sanpaolo and Lloyds Banking go up and down completely randomly.
Pair Corralation between Intesa Sanpaolo and Lloyds Banking
Assuming the 90 days horizon Intesa Sanpaolo is expected to generate 1.13 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, Intesa Sanpaolo SpA is 1.29 times less risky than Lloyds Banking. It trades about 0.08 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Lloyds Banking Group on January 14, 2025 and sell it today you would earn a total of 18.00 from holding Lloyds Banking Group or generate 29.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intesa Sanpaolo SpA vs. Lloyds Banking Group
Performance |
| Timeline |
| Intesa Sanpaolo SpA |
| Lloyds Banking Group |
Intesa Sanpaolo and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intesa Sanpaolo and Lloyds Banking
The main advantage of trading using opposite Intesa Sanpaolo and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intesa Sanpaolo 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.| Intesa Sanpaolo vs. BNP Paribas SA | Intesa Sanpaolo vs. BNP PARIBAS ADR | Intesa Sanpaolo vs. Lloyds Banking Group | Intesa Sanpaolo vs. Lloyds Banking Group |
| Lloyds Banking vs. CANON MARKETING JP | Lloyds Banking vs. FLOW TRADERS LTD | Lloyds Banking vs. Monument Mining Limited | Lloyds Banking vs. RESMINING UNSPADR10 |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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