Correlation Between Lloyds Banking and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Banco Santander 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 Banco Santander 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 Banco Santander Chile, you can compare the effects of market volatilities on Lloyds Banking and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Banco Santander.
Diversification Opportunities for Lloyds Banking and Banco Santander
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lloyds and Banco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Chile has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Banco Santander go up and down completely randomly.
Pair Corralation between Lloyds Banking and Banco Santander
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 1.18 times less return on investment than Banco Santander. In addition to that, Lloyds Banking is 1.76 times more volatile than Banco Santander Chile. It trades about 0.1 of its total potential returns per unit of risk. Banco Santander Chile is currently generating about 0.21 per unit of volatility. If you would invest 5,514 in Banco Santander Chile on November 18, 2024 and sell it today you would earn a total of 924.00 from holding Banco Santander Chile or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Banco Santander Chile
Performance |
| Timeline |
| Lloyds Banking Group |
| Banco Santander Chile |
Lloyds Banking and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Banco Santander
The main advantage of trading using opposite Lloyds Banking and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Lloyds Banking vs. New Oriental Education | Lloyds Banking vs. TAL Education Group | Lloyds Banking vs. Public Storage | Lloyds Banking vs. Liberty Broadband |
| Banco Santander vs. TC Traders Club | Banco Santander vs. Verizon Communications | Banco Santander vs. Take Two Interactive Software | Banco Santander vs. MAHLE Metal Leve |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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