Correlation Between Lloyds Banking and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Companhia Paranaense 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 Companhia Paranaense 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 Companhia Paranaense de, you can compare the effects of market volatilities on Lloyds Banking and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Companhia Paranaense.
Diversification Opportunities for Lloyds Banking and Companhia Paranaense
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lloyds and Companhia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Lloyds Banking and Companhia Paranaense
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.74 times more return on investment than Companhia Paranaense. However, Lloyds Banking Group is 1.35 times less risky than Companhia Paranaense. It trades about 0.1 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.02 per unit of risk. If you would invest 1,616 in Lloyds Banking Group on November 18, 2024 and sell it today you would earn a total of 208.00 from holding Lloyds Banking Group or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.52% |
| Values | Daily Returns |
Lloyds Banking Group vs. Companhia Paranaense de
Performance |
| Timeline |
| Lloyds Banking Group |
| Companhia Paranaense |
Lloyds Banking and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Companhia Paranaense
The main advantage of trading using opposite Lloyds Banking and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense'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 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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