Correlation Between Lloyds Banking and Alphaville
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Alphaville 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 Lloyds Banking and Alphaville into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lloyds Banking Group and Alphaville SA, you can compare the effects of market volatilities on Lloyds Banking and Alphaville 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 Lloyds Banking with a short position of Alphaville. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Alphaville.
Diversification Opportunities for Lloyds Banking and Alphaville
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lloyds and Alphaville is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Alphaville SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphaville SA and Lloyds Banking 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 Lloyds Banking Group are associated (or correlated) with Alphaville. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphaville SA has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Alphaville go up and down completely randomly.
Pair Corralation between Lloyds Banking and Alphaville
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.69 times more return on investment than Alphaville. However, Lloyds Banking Group is 1.46 times less risky than Alphaville. It trades about -0.09 of its potential returns per unit of risk. Alphaville SA is currently generating about -0.28 per unit of risk. If you would invest 1,648 in Lloyds Banking Group on August 28, 2024 and sell it today you would lose (47.00) from holding Lloyds Banking Group or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Alphaville SA
Performance |
| Timeline |
| Lloyds Banking Group |
| Alphaville SA |
Lloyds Banking and Alphaville Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Alphaville
The main advantage of trading using opposite Lloyds Banking and Alphaville positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Alphaville 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 Alphaville will offset losses from the drop in Alphaville's long position.| Lloyds Banking vs. Verizon Communications | Lloyds Banking vs. Automatic Data Processing | Lloyds Banking vs. Raytheon Technologies | Lloyds Banking vs. salesforce inc |
| Alphaville vs. METISA Metalrgica Timboense | Alphaville vs. Southwest Airlines Co | Alphaville vs. Unity Software | Alphaville vs. Tres Tentos Agroindustrial |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |