Correlation Between Lloyds Banking and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and Vipshop Holdings 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 Vipshop Holdings 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 Vipshop Holdings Limited, you can compare the effects of market volatilities on Lloyds Banking and Vipshop Holdings 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 Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Vipshop Holdings.
Diversification Opportunities for Lloyds Banking and Vipshop Holdings
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lloyds and Vipshop is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Lloyds Banking and Vipshop Holdings
Assuming the 90 days trading horizon Lloyds Banking Group is expected to generate 0.69 times more return on investment than Vipshop Holdings. However, Lloyds Banking Group is 1.46 times less risky than Vipshop Holdings. It trades about 0.1 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 1,456 in Lloyds Banking Group on November 28, 2024 and sell it today you would earn a total of 548.00 from holding Lloyds Banking Group or generate 37.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Lloyds Banking Group |
| Vipshop Holdings |
Lloyds Banking and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and Vipshop Holdings
The main advantage of trading using opposite Lloyds Banking and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Lloyds Banking vs. DXC Technology | Lloyds Banking vs. Tyson Foods | Lloyds Banking vs. Marfrig Global Foods | Lloyds Banking vs. Micron Technology |
| Vipshop Holdings vs. HCA Healthcare, | Vipshop Holdings vs. Healthcare Realty Trust | Vipshop Holdings vs. UnitedHealth Group Incorporated | Vipshop Holdings vs. Zoom Video Communications |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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