Correlation Between Inchcape PLC and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Inchcape PLC 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 Inchcape PLC and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inchcape PLC and Lloyds Banking Group, you can compare the effects of market volatilities on Inchcape PLC 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 Inchcape PLC with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inchcape PLC and Lloyds Banking.
Diversification Opportunities for Inchcape PLC and Lloyds Banking
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inchcape and Lloyds is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Inchcape 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 Inchcape PLC 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 Inchcape 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 Inchcape PLC i.e., Inchcape PLC and Lloyds Banking go up and down completely randomly.
Pair Corralation between Inchcape PLC and Lloyds Banking
Assuming the 90 days trading horizon Inchcape PLC is expected to generate 6.86 times more return on investment than Lloyds Banking. However, Inchcape PLC is 6.86 times more volatile than Lloyds Banking Group. It trades about 0.19 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.68 per unit of risk. If you would invest 65,350 in Inchcape PLC on November 28, 2024 and sell it today you would earn a total of 3,850 from holding Inchcape PLC or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inchcape PLC vs. Lloyds Banking Group
Performance |
| Timeline |
| Inchcape PLC |
| Lloyds Banking Group |
Inchcape PLC and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inchcape PLC and Lloyds Banking
The main advantage of trading using opposite Inchcape PLC and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inchcape PLC 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.| Inchcape PLC vs. T Mobile | Inchcape PLC vs. Raytheon Technologies Corp | Inchcape PLC vs. Roper Technologies | Inchcape PLC vs. Uber Technologies |
| Lloyds Banking vs. National Beverage Corp | Lloyds Banking vs. Fulcrum Metals PLC | Lloyds Banking vs. Molson Coors Beverage | Lloyds Banking vs. GreenX Metals |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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