Correlation Between Lloyds Banking and KBC Group
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and KBC Group 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 KBC Group 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 KBC Group NV, you can compare the effects of market volatilities on Lloyds Banking and KBC Group 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 KBC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and KBC Group.
Diversification Opportunities for Lloyds Banking and KBC Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and KBC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and KBC Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Group NV 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 KBC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Group NV has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and KBC Group go up and down completely randomly.
Pair Corralation between Lloyds Banking and KBC Group
Assuming the 90 days horizon Lloyds Banking Group is expected to generate 1.48 times more return on investment than KBC Group. However, Lloyds Banking is 1.48 times more volatile than KBC Group NV. It trades about 0.03 of its potential returns per unit of risk. KBC Group NV is currently generating about 0.04 per unit of risk. If you would invest 52.00 in Lloyds Banking Group on October 15, 2024 and sell it today you would earn a total of 13.00 from holding Lloyds Banking Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. KBC Group NV
Performance |
| Timeline |
| Lloyds Banking Group |
| KBC Group NV |
Lloyds Banking and KBC Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and KBC Group
The main advantage of trading using opposite Lloyds Banking and KBC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, KBC Group 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 KBC Group will offset losses from the drop in KBC Group's long position.| Lloyds Banking vs. Magnachip Semiconductor | Lloyds Banking vs. Tower Semiconductor | Lloyds Banking vs. Canon Marketing Japan | Lloyds Banking vs. FLOW TRADERS LTD |
| KBC Group vs. URBAN OUTFITTERS | KBC Group vs. Gaztransport Technigaz SA | KBC Group vs. Gold Road Resources | KBC Group vs. Fast Retailing Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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