Correlation Between Lloyds Banking and Deutsche Bank
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Deutsche Bank 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 Deutsche Bank 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 Deutsche Bank Aktiengesellschaft, you can compare the effects of market volatilities on Lloyds Banking and Deutsche Bank 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 Deutsche Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Deutsche Bank.
Diversification Opportunities for Lloyds Banking and Deutsche Bank
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lloyds and Deutsche is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Deutsche Bank go up and down completely randomly.
Pair Corralation between Lloyds Banking and Deutsche Bank
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 1.85 times more return on investment than Deutsche Bank. However, Lloyds Banking is 1.85 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about 0.16 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.29 per unit of risk. If you would invest 1,664 in Lloyds Banking Group on October 28, 2024 and sell it today you would earn a total of 150.00 from holding Lloyds Banking Group or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Deutsche Bank Aktiengesellscha
Performance |
| Timeline |
| Lloyds Banking Group |
| Deutsche Bank Aktien |
Lloyds Banking and Deutsche Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Deutsche Bank
The main advantage of trading using opposite Lloyds Banking and Deutsche Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Deutsche Bank 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 Deutsche Bank will offset losses from the drop in Deutsche Bank's long position.| Lloyds Banking vs. DXC Technology | Lloyds Banking vs. Unity Software | Lloyds Banking vs. Ross Stores | Lloyds Banking vs. Patria Investments Limited |
| Deutsche Bank vs. Nordon Indstrias Metalrgicas | Deutsche Bank vs. Guidewire Software, | Deutsche Bank vs. METISA Metalrgica Timboense | Deutsche Bank vs. TAL Education Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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