Correlation Between KBC Group and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both KBC Group 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 KBC Group and Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBC Group NV and Lloyds Banking Group, you can compare the effects of market volatilities on KBC Group 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 KBC Group with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Group and Lloyds Banking.
Diversification Opportunities for KBC Group and Lloyds Banking
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KBC and Lloyds is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding KBC Group NV 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 KBC Group 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 KBC Group NV 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 KBC Group i.e., KBC Group and Lloyds Banking go up and down completely randomly.
Pair Corralation between KBC Group and Lloyds Banking
Assuming the 90 days horizon KBC Group is expected to generate 1.15 times less return on investment than Lloyds Banking. But when comparing it to its historical volatility, KBC Group NV is 1.48 times less risky than Lloyds Banking. It trades about 0.04 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Lloyds Banking Group on October 15, 2024 and sell it today you would earn a total of 13.00 from holding Lloyds Banking Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBC Group NV vs. Lloyds Banking Group
Performance |
| Timeline |
| KBC Group NV |
| Lloyds Banking Group |
KBC Group and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBC Group and Lloyds Banking
The main advantage of trading using opposite KBC Group and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Group 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.| KBC Group vs. URBAN OUTFITTERS | KBC Group vs. Gaztransport Technigaz SA | KBC Group vs. Gold Road Resources | KBC Group vs. Fast Retailing Co |
| Lloyds Banking vs. Magnachip Semiconductor | Lloyds Banking vs. Tower Semiconductor | Lloyds Banking vs. Canon Marketing Japan | Lloyds Banking vs. FLOW TRADERS LTD |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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