Correlation Between Lloyds Banking and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Honeywell International 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 Honeywell International 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 Honeywell International, you can compare the effects of market volatilities on Lloyds Banking and Honeywell International 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 Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Honeywell International.
Diversification Opportunities for Lloyds Banking and Honeywell International
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and Honeywell is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International 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 Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Honeywell International go up and down completely randomly.
Pair Corralation between Lloyds Banking and Honeywell International
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 1.37 times more return on investment than Honeywell International. However, Lloyds Banking is 1.37 times more volatile than Honeywell International. It trades about 0.05 of its potential returns per unit of risk. Honeywell International is currently generating about 0.04 per unit of risk. If you would invest 1,070 in Lloyds Banking Group on September 21, 2024 and sell it today you would earn a total of 571.00 from holding Lloyds Banking Group or generate 53.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.2% |
| Values | Daily Returns |
Lloyds Banking Group vs. Honeywell International
Performance |
| Timeline |
| Lloyds Banking Group |
| Honeywell International |
Lloyds Banking and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Honeywell International
The main advantage of trading using opposite Lloyds Banking and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Honeywell International 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 Honeywell International will offset losses from the drop in Honeywell International's long position.| Lloyds Banking vs. Fundo Investimento Imobiliario | Lloyds Banking vs. LESTE FDO INV | Lloyds Banking vs. Fras le SA | Lloyds Banking vs. Western Digital |
| Honeywell International vs. Lloyds Banking Group | Honeywell International vs. Metalurgica Gerdau SA | Honeywell International vs. MAHLE Metal Leve | Honeywell International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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