Correlation Between National Atomic and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both National Atomic 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 National Atomic and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Atomic Co and Lloyds Banking Group, you can compare the effects of market volatilities on National Atomic 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 National Atomic with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Atomic and Lloyds Banking.
Diversification Opportunities for National Atomic and Lloyds Banking
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Lloyds is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co 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 National Atomic 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 National Atomic Co 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 National Atomic i.e., National Atomic and Lloyds Banking go up and down completely randomly.
Pair Corralation between National Atomic and Lloyds Banking
Assuming the 90 days trading horizon National Atomic Co is expected to generate 0.98 times more return on investment than Lloyds Banking. However, National Atomic Co is 1.02 times less risky than Lloyds Banking. It trades about 0.12 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.01 per unit of risk. If you would invest 3,910 in National Atomic Co on September 1, 2024 and sell it today you would earn a total of 135.00 from holding National Atomic Co or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Atomic Co vs. Lloyds Banking Group
Performance |
| Timeline |
| National Atomic |
| Lloyds Banking Group |
National Atomic and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Atomic and Lloyds Banking
The main advantage of trading using opposite National Atomic and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic 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.| National Atomic vs. Ashtead Technology Holdings | National Atomic vs. Concurrent Technologies Plc | National Atomic vs. Ross Stores | National Atomic vs. Lendinvest PLC |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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