Correlation Between IShares Trust and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Lloyds Banking Group, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Lloyds Banking.
Diversification Opportunities for IShares Trust and Lloyds Banking
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and Lloyds is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Lloyds Banking go up and down completely randomly.
Pair Corralation between IShares Trust and Lloyds Banking
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.19 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, iShares Trust is 1.09 times less risky than Lloyds Banking. It trades about 0.11 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,417 in Lloyds Banking Group on August 25, 2024 and sell it today you would earn a total of 1,533 from holding Lloyds Banking Group or generate 44.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Lloyds Banking Group
Performance |
| Timeline |
| iShares Trust |
| Lloyds Banking Group |
IShares Trust and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Lloyds Banking
The main advantage of trading using opposite IShares Trust and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Trust |
| Lloyds Banking vs. Genworth Financial | Lloyds Banking vs. McEwen Mining | Lloyds Banking vs. Micron Technology | Lloyds Banking vs. DXC Technology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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